VICTOR HIT AGAIN
October 7, 2007 — Victor Niederhoffer appears to be a two-time loser.
Niederhoffer, the father of modern hedge funds, who lost his entire $130 million portfolio in 1997 when he bet wrong that stocks in Thailand were ready for a bull run but then slowly and carefully rebuilt his business and his reputation, was been forced to shutter his flagship Matador fund last month after getting blindsided by the subprime mortgage meltdown.
The incredible story of loss, redemption and then loss again, which was lost amid the hedge fund disasters at larger firms like Goldman Sachs, Bear Stearns and Lehman Brothers, is unfolded in the next issue of The New Yorker, on newsstand tomorrow.
The Brooklyn-born, Harvard educated Niederhoffer, 63 tells the magazine, the subprime mortgage mess is one of the greatest turmoils in Wall Street history.”
I was caught wrong-footed in the market turbulence,” said Niederhoffer, whose $350 million of assets under management was puny compared to the multi-billion dollar blow-ups down the Street. We were prepared for many different contingencies, but this kind of one we were not prepared for.”
No, it wasn’t the size of the blow-up that made it so poignant but that Niederhoffer was a lifelong gambler who’d tip-toed about the rim of stupid investment moves - and fallen hard - just 10 years ago. It was the so-called Asian contagion that did him in then.
It could have been hubris that knocked him down this time.
A member of the squash hall of fame and a collegiate champion at Harvard, Niederhoffer’s first memory of putting money on the line was a $2 bet he placed on the Brooklyn Dodgers in 1951. On Yom Yippur that year, an eight-year old Niederhoffer sneaked out of synagogue to place his Dodgers bet - which lost spectacularly when Bobby Thompson hit the shot heard ’round the world.
After losing his entire $139 million portfolio, Niederhoffer went into a depression for years. By 2003 he was finally ready to start anew. >PAGE 1>
