Michael Platt (financier)

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Michael Platt
BornMichael Edward Platt
(1968-12-12) 12 December 1968 (age 49)[1]
Preston, England
ResidenceJersey
NationalityBritish
Alma materLondon School of Economics
OccupationInvestor, fund manager, and philanthropist
Known forCo-founding BlueCrest Capital Management
Net worthUS$6.5 billion (April 2018)[2]
TitleCEO, BlueCrest Capital Management
Websitehttp://www.bluecrestcapital.com/

Michael Edward Platt (born 12 December 1968)[1] is a British investor, hedge fund manager, and philanthropist. He is the co-founder and managing director of BlueCrest Capital Management, Europe's third-largest hedge-fund firm.[3] He co-founded the firm in 2000.

Early life and education[edit]

Platt was born in Preston, Lancashire, England in 1968. His father taught civil engineering at the University of Manchester. His mother was a university administrator. His grandmother, whom he has described as “a serious equity trader,” introduced him to investment. She “helped him buy stock in trust savings banks that were selling shares to the public.” At 14, he invested 500 pounds in a shipping line, Common Brothers, that soon tripled in price.[4] Some of his first investments were in Britain's newly privatised utilities.[5]

He studied Civil Engineering at Imperial College London. After a year, he switched to Mathematics and Economics at the London School of Economics, from which he graduated in 1991.[6]

Investment career[edit]

Early career[edit]

Platt started in the City after his grandmother gave him some shares in which to invest and he discovered he had a talent for investing.[7][1][8]

He joined JP Morgan in 1991. Platt assumed responsibility for developing JP Morgan's swaps and options trading business in April 1992, and in April 1996, became the head of trading for all swaps products relating to the 11 founding nations of the European single currency. In 2000 Platt co-founded BlueCrest Capital Management LLP, with William Reeves.[9][6]

BlueCrest Capital[edit]

Discerning in August 2007 that “a stock market crash lay ahead,” Platt “sold his bank shares, and bought ‘safe’ sovereign bonds,” and thus “avoided the worst of the financial crisis, and profited from the resulting 'flight to quality' and plunge in interest rates.”[5]

As of 2014, BlueCrest was Europe's fourth largest hedge fund.[10] In that year, it managed over £30bn, and employs 350 people.[11] BlueCrest initially focused on trading interest rates and using computer algorithms to capture trends in bonds and commodities.

In 2013 it expanded into trading equity to compete with Millennium Management LLC and SAC Capital Advisors LLP.[3]

In 2011, George Soros decided to stop managing money for outside clients and turn his hedge-fund firm into a family office. Soros spoke to Platt, asking him to take on more than $1 billion for a 0.5 percent management fee and a 10 percent performance fee. Platt reportedly declined the offer, saying plenty of investors were willing to pay BlueCrest 2-and-20, the industry standard fee structure.[12]

That same year, Platt discussed the crisis in the Eurozone, attributing it to “the cultural and political divide” between north and south. “The reality is that there is no willingness within the Eurozone to share wealth,” he said. “In the United States, if California is having a really difficult time, the rest of the United States will send money to California. This is not the case in Europe.” He further maintained that Europe's problem was that “almost every part of it has gone wrong now. The banks are undercapitalized…If banks were hedge funds, and you mark them to market properly, I would say that probably most of them are insolvent.” By contrast, he was relatively positive about the U.S. and Germany.[13]

In 2013, BlueCrest invested $50 million in Meredith Whitney's hedge fund, Kenbelle Capital.[14] In October of that year, BlueCrest made a redemption request, but while Kenbelle said it would comply, no repayment was forthcoming. The next year, BlueCrest sued in Bermuda to get its money back from the firm. In 2015, Whitney closed up shop and paid back all her investors, including BlueCrest.[15][16]

In December 2015, Platt announced that BlueCrest would return $7 billion for outside investors, take no outside money in the future, and become a private partnership.[17][18] In his letter to investors explaining the change, Platt explained that “[r]ecent developments in the industry, including, among other things, downward pressure on fee levels, the increasing cost of hiring the best portfolio management talent and the difficulty in tailoring investment products to meet the individual needs and constraints of a large number of diverse investors, have all significantly reduced industry profitability and flexibility.” Consequently “BlueCrest believes that a transition to a Private Investment Partnership model is now appropriate for the business.”[19]

In 2016, BlueCrest had a profit of almost 50 percent; in 2017, Platt “led his private investment firm to a 54 percent gain.” This contrasted with “mediocre returns at some of the largest hedge funds in the world,” noted Bloomberg News.[20] In 2018, the Sunday Times named Platt “the richest hedge fund manager in the City.” During the year, his net wealth had grown by 25 percent.[21]

Strategy[edit]

In July 2017, Platt's investment strategy was described as follows: “Platt splits BlueCrest’s assets between systematic strategies (based on pattern-spotting computer algorithms) and discretionary (human-driven) trades. The systematic trades are generally trend-following strategies – basically, buying assets that are going up, and selling ones that are falling. He delegates the day-to-day management to his traders, but retains overall control. He believes in aggressive stop losses – he will cut traders’ allocations drastically if they lose as little as 3% of their capital, but will also lift allocations to winning trades.”[22]

In his first live television interview, given to Bloomberg on December 15, 2011, Platt said that there are “three things he won't touch – exposure to banks, peripheral debt risk, and illiquid investments.”[23]

Asked how he finds “talented traders” to employ, he has said that he seeks out “someone who understands an edge.” For example, “I look for the type of guy in London who gets up at seven o’clock on Sunday morning when his kids are still in bed and logs on to a poker site so that he can pick off the US drunks coming home on Saturday night.”[24] There are at least three other things he looks for in traders: first, “[a]n understanding that the market is always right,” so that in when the market is stress, value is irrelevant; second, “[p]aranoia,” which can led them “to hedge their winning trades” and help them to “manage when they have losing positions”; third, an ability to admit when one is wrong.[25]

Personal life[edit]

In 2010, he moved from London to Geneva, Switzerland, to save tax and avoid increased regulation. In 2014, it was reported that he had relocated to Jersey, along with his hedge fund, which was moving from nearby Guernsey, for tax purposes.[26][17][27]

He is a notable art collector having built a contemporary art collection not by shopping for pictures, but by commissioning them from well-known artists. He has a private showroom in the crypt of a deconsecrated church at One Marylebone, which displays a selection of art by, among others, taxidermist Polly Morgan, the Turner Prize-winning sculptor and installation artist Keith Tyson and Reece Jones [9]

Platt appeared as "himself" on Showtime's series Billions in episode 1, Season 3.[28]

References[edit]

  1. ^ a b c "Michael Platt profile". Octafinance.com. 12 December 1968. Retrieved 20 March 2017.
  2. ^ "The World's Billionaires: Michael Platt". Forbes. Retrieved 8 April 2018.
  3. ^ a b Westbrook, Jesse (20 December 2013). "Man Who Said No to Soros Builds BlueCrest Into Empire". Bloomberg. Bloomberg. Retrieved 27 August 2014.
  4. ^ Levin, Bess. "BlueCrest Capital Founder Turned On To Trading By Grandmother".
  5. ^ a b "The world's greatest investors: Michael Platt - MoneyWeek". 28 July 2017.
  6. ^ a b Steward, Martin. "Company Overview of BlueCrest Capital Management (UK) LLP". Businessweek. Bloomberg. Retrieved 27 August 2014.
  7. ^ Levin, Bess (14 April 2012). "BlueCrest Capital Founder Turned On To Trading By Grandmother". Dealbreaker. Retrieved 20 March 2017.
  8. ^ Godfrey Barker (18 March 2010). "How Mike Platt and Joe La Placa took over the contemporary art world". Standard.co.uk. Retrieved 20 March 2017.
  9. ^ a b Barker, Godfrey. "How Mike Platt and Joe La Placa took over the contemporary art world". Standard. Evening Standard. Retrieved 27 August 2014.
  10. ^ "Platt's $50 Billion BlueCrest Dream Deferred as Investors Leave".
  11. ^ Vardi, Nathan (Jan 2012). "The 40 Highest-Earning Hedge Fund Managers". Forbes. Forbes. Retrieved 27 August 2014.
  12. ^ Westbrook, Jesse (20 December 2013). "Man Who Said No to Soros Builds BlueCrest Into Empire". Bloomberg. Bloomberg. Retrieved 27 August 2014.
  13. ^ "Hedge Fund Titan Michael Platt Reveals The Three Things He Won't Touch".
  14. ^ Copeland, Rob; Zuckerman, Gregory (10 June 2015). "Meredith Whitney Shuts Her Hedge Fund" – via www.wsj.com.
  15. ^ "Latest news". www.bizjournals.com. 2014.
  16. ^ Levin, Bess. "Meredith Whitney Is Returning To Her Roots".
  17. ^ a b Vardi, Nathan (1 December 2015). "Billionaire Michael Platt Closes His BlueCrest Hedge Fund". Forbes. Retrieved 2 March 2017.
  18. ^ Stevenson, Alexandra; Goldstein, Matthew (1 December 2015). "BlueCrest to Close Hedge Fund and Refund Outside Investors". nytimes.com. New York Times. Retrieved 8 October 2016.
  19. ^ https://www.businessinsider.com.au/michael-platts-bluecrest-to-return-outside-money-2015-12
  20. ^ ]https://www.bloomberg.com/view/articles/2018-07-18/puerto-rico-battles-short-sighted-hedge-funds
  21. ^ https://www.hedgeweek.com/2018/05/11/264122/michael-platt-tops-sunday-times-hedge-fund-manager-rich-list
  22. ^ https://moneyweek.com/the-worlds-greatest-investors-michael-platt/
  23. ^ http://www.businessinsider.com/michael-platt-bluecrest-capital-bloomberg-tv-2011-12?r=US&IR=T&IR=T
  24. ^ http://www.worldtopinvestors.com/michael-platt-invests-his-own-money/
  25. ^ https://blog.topsteptrader.com/michael-platt-training-traders
  26. ^ Fortado, Lindsay (10 December 2014). "BlueCrest's Founder Platt Said to Move to Jersey From Geneva". Bloomberg LP. Retrieved 2 March 2017.
  27. ^ "Michael Platt: One of the Most Effective Risk Managers". Uk.advfn.com. Retrieved 20 March 2017.
  28. ^ "'Billions' Season 3 Premiere: The Next Big Thing". 25 March 2018 – via NYTimes.com.