Alan Howard: Tale of a Turnaround
Comeback stories are among the most compelling ones, and 2018 provided one financial whale with a turnaround that rivals the best of them. In the case of Mr. Alan Howard, the world saw a man take a great hedge fund and make it even better.
After graduating from Imperial College London with a master’s degree in science, Alan Howard began his financial career at Salomon Brothers in their bond department before moving to Credit Suisse. After becoming Global Head of Proprietary Trading at Credit Suisse First Boston, Mr. Howard took a position at Greenbriar Equity Group, where he became their Managing Director.
In 2002, Alan Howard co-founded Brevan Howard Asset Management with colleagues from Credit Suisse. One of the world’s leading global macro absolute return managers, Brevan Howard manages assets for over 200 institutional investors around the globe, including sovereign wealth funds, corporate and public pension plans, foundations, and endowments.
With over 200 employees with offices in London, New York, Geneva, Jersey, Hong Kong, Washington, and Singapore, Brevan Howard Asset Management was once one of the world’s top macro hedge funds. At its peak in 2013, the firm had $40 billion in assets under management.
Much of Mr. Howard’s success during this time has been attributed to his policy of strict risk management. For instance, his caution served him well in the challenging year of 2011, as Alan Howard’s Master Fund earned over 10% during the first 10 months of that year; this performance landed Alan the 20th position among Bloomberg’s list of the 100 best-performing hedge funds at that time.
Unfortunately for Alan Howard and his firm, Brevan Howard then experienced a multi-year streak of uninspiring returns. This led to billions in withdrawals by investors, and Brevan Howard’s assets under management dwindled from $40 billion to under $10 billion.
Things just seemed to go from bad to worse, with Alan Howard’s main fund posting negative returns in three out of four years and dropping 5% in 2017. This was a long way to fall from having been celebrated as one of the 40 highest-earning hedge-fund managers by Forbes in February of 2013.
Then came the June 6, 2018 Bloomberg headline: “Hedge Fund Managed by Billionaire Howard Gained 37% in May,” followed by the sub-headline: “Fund run by the billionaire is said to gain 44% this year.” This transpired amid the first half of a lackluster year in the equities markets, making Brevan Howard’s performance all the more remarkable.
All of this took place after the financial community had all but given up on Alan Howard; there was even speculation that Mr. Howard would become the latest hedge fund manager to throw in the towel on his business and turn it into a family office. Now with a personal net worth of $1.4 billion and his firm’s reputation fully restored, Mr. Alan Howard is back on top and as profitable as ever.
To what can we attribute Alan Howard’s turnaround? Is it just luck? Or is it, as has been speculated in the media, the result of positions linked to the movements in Italian bonds? I would proffer that it’s none of those; rather, I would impute it to a policy of risk aversion, stay-the-course consistency, and unflagging leadership that has made his fund unbeatable.