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Soros to End Hedge-Fund Career, Return Money to Clients
Bloomberg By Katherine Burton - Jul 26, 2011

George Soros, the billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm, ending a career as hedge-fund manager that spanned more than four decades. His firm will focus on managing assets solely for Soros and his family.

The move completes Soros’s transformation from a speculator, who in 1992 made $1 billion betting that the Bank of England would be forced to devalue the pound, to philanthropist statesman, a role he first imagined for himself as a Hungarian émigré studying at the London School of Economics after World War II, according to Soros’s writings. In the last 30 years, he’s given away more than $8 billion to promote democracy, foster free speech, improve education and fight poverty around the world, he said in a recent essay.

Family Assets
Soros’s sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter.

“We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum,” the executives said in the letter, referring to its flagship Quantum Endowment Fund. “As those other exemptions are no longer available under the new regulations, Soros Fund Management will now complete the transition to a family office that it began eleven years ago.”

Druckenmiller’s Move
While Quantum has returned about 20 percent a year, on average, since 1969, when its predecessor was started, according to a person familiar with the firm, the fund’s performance has suffered in the last 18 months. In the first half of this year, Quantum lost about 6 percent, the person said, following a gain of 2.5 percent in 2010. Other macro funds have returned 5.6 percent in the last year-and-a-half, according to Chicago-based Hedge Fund Research Inc.

Soros was born in Budapest in 1930, as Dzjchdzhe Shorash. When the Nazis invaded the city in 1944, Soros’s father arranged for false papers for his family and friends that identified them as non-Jews. Most of the people his father helped survived the war, Soros said in the essay published in the New York Review of Books in late June.

‘Evil Force’
“Instead of submitting to our fate we resisted an evil force that was much stronger than we were -- yet we prevailed. Not only did we survive, but we managed to help others,” he wrote, adding the experience gave him an appetite for taking risk. “This left a lasting mark on me, turning a disaster of unthinkable proportions into an exhilarating adventure.”

After London, Soros came to New York at the age of 26 and became a trader, initially buying and selling stocks for Wall Street brokerage F.M. Mayer. He planned to work for five years, enough time, he reckoned, to save $500,000 and return to England where he would pursue his philosophical studies. Instead, he stayed in the world of finance, eventually moved to Arnhold and S. Bleichroeder Advisors LLC, where he set up the predecessor to the Quantum fund in 1969. He started his own firm in 1973.

Conflicting Goals
Over the years, Soros had to deal with conflicting goals of making good and doing good. While Soros’s fund made about $750 million betting on a decline in the Thai baht in 1997, the wager increased economic woes in Thailand as the government spent billions unsuccessfully defending its currency. In the wake of the devaluation, Thailand was forced to cut public spending in exchange for a $17.2 billion rescue package from the International Monetary Fund.

In 1997, his philanthropic tendencies drove him to buy Russian assets. He took a $1 billion stake in RAO Svyazinvest, Russia’s state-owned telecommunications company, and went on to buy Russian stocks and bonds. “He felt that if he was a beacon of investment in Russia, others would follow and the capital inflows would transform the society and integrate them into the G7,” Robert Johnson, a former Soros managing director, told author Sebastian Mallaby in his book ‘More Money than God.’ “There’s a philanthropic side of George that started to interfere with the speculative one.”

‘Public Interest’
In his recent essay, Soros echoed the remarks of his former colleague.

“I have made it a principle to pursue my self-interest in my business, subject to legal and ethical limitations, and to be guided by the public interest as a public intellectual and philanthropist,” he wrote. “If the two are in conflict, the public interest ought to prevail,” he said. Soros opened his first foundation, the Open Society Fund, in 1979, when his fund had reached about $100 million and his personal wealth had climbed to about $25 million. His initial focus was on promoting democracy and a market economy in Eastern Europe. Soros now funds a network of foundations that operate in 70 countries around the globe, everywhere from the U.S. to Montenegro to South Africa and Haiti.

Stepping In
In 2007, as the subprime mortgage crisis was gaining speed, Soros again stepped in. Quantum returned 32 percent that year and posted an 8 percent gain in 2008, when funds on average dropped about 19 percent. Overall, Quantum Endowment grew from about $11 billion in June 2000 to today’s level.

The uncertainty about markets and Quantum’s 6 percent dive caused Anderson to sell positions in mid-June and the firm is now holding about 75 percent cash. In the meantime, Soros continues to focus on his philanthropy and on voicing his views on macroeconomic events, such as the sovereign debt crisis in Europe.

“My success in the financial markets has given me a greater degree of independence than most other people,” Soros wrote in his recent essay. “This obliges me to take stands on controversial issues when others cannot, and taking such positions has itself been a source of satisfaction. In short, my philanthropy has made me happy.”

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Comment:

Soros is one of the greatest investors that I respect the most not only because I am involving in the same industry as he is doing but also his experience (bets on British Pound, Japanese housing bubble and Thai Baht) and views (Reflexivity Theory, Gold, and European Debt Crisis) open my eyes on the whole financial world, or even social evolution in a large sense.

However, The poor performance of his fund this year still reminds us that we are in a "New Normal" world as PIMCO claims, in which uncertainty dominates the financial world with the speed of economic growths diverges between emerging markets and developed markets when recovering from the financial crisis. And, the after-crisis recovery road is bumpy for DMs and not easy for EMs.  

The headline news these days shows us that economics and politics are tightly connected. Due to the political conflicts, we can only see a small progress in the eurozone crisis. The new aid package only mitigate the situations in Greece, credit-neutral for Portugal and Ireland given their small economic sizes but will leave Spain and Italy's problems still unsolved. We will see another aid package after a series of political comprises. The eurozone crisis is on pause, not over as Munchau of FT says.

Again due to the political conflicts, the markets are still waiting for any US debt ceiling debate outcome. I think the markets will not regard Boehner's two-step plan as positive. And S&P says today that it may downgrade US even if debt ceiling is raised. In US history, according to Paul Krugman, the economic equality and political bipartisanship accompany together. Both the beginning and the end of the era of bipartisanship reflected fundamental changes in the Republican Party. The current situation reflects this point as we will see a more unequal American society if bipartisanship retreats.

In Asian EMs, China, for example, is suffering the consequence of its too fast economic development. The issues of the recent train crash, the collapse of a bridge in Hangzhou, flooding in major cities, China Red Cross scandal, etc are all reflections of the social inequality and corruption related with low quality of infrastructures. The authority should be alerted to slowdown the fixed-asset investment and focus on consumption-driven economic growth. But to make the society more equal requires more political reforms.

India's larger than market expected rate hike on July 26 gives evidence that it concerns about the inflation risk over growth. India is the only major Asian country which has an inverted yield curve, a signal of economic recession.  Except for China and India which concern inflation more than growth, a clear moderation in domestic and external demand can be seen in other Asian countries. Given the increasing downside risks from DMs, Asian policy makers will hesitate to tighten their monetary policies further.

George Soros is a Hungarian-American financier, businessman and notable philanthropist focused on supporting liberal ideals and causes. He became known as "the Man Who Broke the Bank of England" after he made a reported $1 billion during the 1992 Black Wednesday UK currency crises. Soros correctly speculated that the British government would have to devalue the pound sterling.

Soros is Chairman of the Soros Fund Management and the Open Society Institute and a former member of the Board of Directors of the Council on Foreign Relations. He played a significant role in the peaceful transition from communism to capitalism in Hungary (1984–89)[5] and provided Europe's largest-ever higher education endowment to Central European University in Budapest.[7] Later, the Open Society Institute's programs in Georgia were considered by Russian and Western observers to have been crucial in the success of the Rose Revolution. In the United States, he is known for donating large sums of money in an effort to defeat President George W. Bush's bid for re-election in 2004. In 2010, he donated $1 million in support of Proposition 19, which would have legalized marijuana in the state of California. He was an initial donor to the Center for American Progress, and he continues to support the organization through the Open Society Foundations. The Open Society Institute has active programs in more than 60 countries around the world with total expenditures currently averaging approximately $600 million a year.

In 2003, former Federal Reserve Chairman Paul Volcker wrote in the foreword of Soros' book The Alchemy of Finance:

    George Soros has made his mark as an enormously successful speculator, wise enough to largely withdraw when still way ahead of the game. The bulk of his enormous winnings is now devoted to encouraging transitional and emerging nations to become 'open societies,' open not only in the sense of freedom of commerce but – more important – tolerant of new ideas and different modes of thinking and behavior.

New York Times columnist Paul Krugman is critical of Soros's effect on financial markets.

    "]obody who has read a business magazine in the last few years can be unaware that these days there really are investors who not only move money in anticipation of a currency crisis, but actually do their best to trigger that crisis for fun and profit. These new actors on the scene do not yet have a standard name; my proposed term is 'Soroi.'

from wikipedia  it has a detailed description  there   reading it , you can know more about a legend financial talent.     http://en.wikipedia.org/wiki/George_Soros

undoubtedly ! he is a great speculator in the financial history , a strong supporter of free market . and a financier, businessman and notable philanthropist . in addition , he is ont a market spoilers . as he said “I have made it a principle to pursue my self-interest in my business, subject to legal and ethical limitations, and to be guided by the public interest as a public intellectual and philanthropist,” he wrote. “If the two are in conflict, the public interest ought to prevail,” and he has an appetite for taking risk because of his early life experience and background .

George Soros became famous for $1 billion betting during the 1992 Black Wednesday UK currency crises .which gave him a nickname "the Man Who Broke the Bank of England" .with  1997 “s Asian financial crisis made ​​him great fame .

from this artical , with new financial regulations , global economic depression ,euro and U.S. debt crisis , e fund’s performance has suffered in the last 18 months. In the first half of this year, Quantum lost about 6 percent, in his $25.5 billion firm ,outside money only accounted for about $4 billion, with all factors being considered , he made a desicion" End Hedge-Fund Career, Return Money to Clients" .

as a public celebrity , he has his a greater degree of independence and his own political statement free from outside influence . being happy with his philanthropy . he is a great man , living free and happy . his different modes of thinking and behavior will affect generation after generation .

It is interesting to notice that the latest financial regulation , especially Dodd Frank Law, has a decisive impact on hedge funds. The law required funds to register in the SEC and join the clearing house system if they trade financial derivatives. It means that Hedge funds might need to report to SEC- the financial supervisory authority in US, at the same time, the SEC has the right to investigate into  the operation of hedge funds. In this regard, the Hedge funds have little room to have insider information which is their way to earn alpha returns. Without insider information, how can hedge fund beat the benchmark? do you really believe those quants could make the stupid model to predict the trend of market? they just use those crap models to support the insider information.

信息太丰富了!Stepping In
In 2007, as the subprime mortgage crisis was gaining speed, Soros again stepped in. Quantum returned 32 percent that year and posted an 8 percent gain in 2008, when funds on average dropped about 19 percent. Overall, Quantum Endowment grew from about $11 billion in June 2000 to today’s level.

确实够EVIL的,Evil Force’
“Instead of submitting to our fate we resisted an evil force that was much stronger than we were -- yet we prevailed. Not only did we survive, but we managed to help others,” he wrote, adding the experience gave him an appetite for taking risk. “This left a lasting mark on me, turning a disaster of unthinkable proportions into an exhilarating adventure.”

i know little about Hedge funds , are they mostly using  insider information to beat the benchmark . their quants fool the market investors by the stupid model to predict the trend of market . but in my opinion , they undoubltedly can gain insider information ,but their public statement has a wide influence in the capital markets . if they always cheat the investors , they will lose market authority and the trust of investors.
5# maiwenzhen

It is exciting for me to read this topic. Soros is an excellent investor and philanthropist . He has a future vision and gain the prestige or reputation by use of the money.
    To my disappointment, the weath in our country , buy the luxury goods and hoard the housing to increasing the price of them. Let alone the poor's feel. What's worse ,they can't take advantage of their money well, only to arous some economic turmoils.
     I appreciat the behavior of Soros, as well as Bill Gates and Buffett . Their good works will spread from generation to generation. As an old saying in our country"Big trees are vulnerabe to be attacted by winds". If the wealth can be aware of that, the gap between the rich and the poor will be short. In that case ,the chance for their dreams will be equal, which can promote the social progress.

Soros is quite a different person. He attacked many markets and fought against many countries, but he also donated a lot of money to the poor. He made many people suffer while making many a brand new life. He is a person that will be kept in memory in the long history.