FA Alpha Daily

This global macro hedge fund changing its course to America’s giants

Moore Capital, an over $15 billion macro giant hedge fund led by Louis Bacon, established a strong leadership in navigating crises and seizing opportunities across emerging markets like Alphabet (GOOGL). Recognizing maturing opportunities in developing economies solidifies its elite status in the global macro arena. In today’s FA Alpha Daily, we delve into Moore Capital’s journey, including its investment strategies, response to market dynamics, and key success factors.

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Moore Capital Management is one of the largest and most successful macro hedge funds in the world today.

Founded in 1989 by legendary investor Louis Bacon, Moore Capital has grown its assets under management to over $15 billion through three decades of macro investing across global markets.

Bacon, who cut his teeth as a trader at Phillip Brothers (now HSBC Securities), started Moore Capital with just $1.8 million in seed capital.

He employed a global macro strategy, analyzing top-down economic and political factors to take directional bets on currencies, fixed income, equities, and commodities worldwide.

In the early 1990s, as other macro funds were burned by the Black Monday crash of 1987, Bacon stayed bullish on emerging markets like Mexico and profited mightily from the Tequila Crisis.

This counterintuitive call established Moore Capital’s reputation for macro insight into less followed regions.

Through the Asian Financial Crisis and the Russian debt default of 1998, Moore Capital continued identifying opportunities in volatile emerging markets while many peers retreated to developed nations.

This contrarian approach paid off, with the flagship Moore Global Investments fund returning over 30% that tumultuous year.

The 2000s saw Moore Capital cement its status among the elite of macro hedge funds. While technology stocks crashed, Bacon shorted overvalued names like Cisco and profited.

In 2008, with precise macroeconomic analysis, he avoided subprime exposure and generated over 16% returns as peers collapsed.

By the late 2010s, Moore Capital had become a true global macro powerhouse.

While Moore Capital Management has built its reputation on macro insights into emerging and frontier markets, the firm appears to be altering its portfolio allocation strategy in recent years.

Underneath its global macro approach, Moore Capital’s equity holdings have become increasingly concentrated in large-cap US corporations.

Many of the developing economies Moore Capital invested in early on, such as Mexico, Brazil, and China, have matured significantly over the past two decades.

With robust middle classes and institutional frameworks developing, these nations no longer offer the high-risk, high-return opportunities that attracted macro hedge funds in the 1990s and 2000s.

Compounding this is slower economic expansion in many emerging markets in recent years relative to developed peers. With growth engines cooling, the macro upside has diminished versus the potential in rebounding American companies post-COVID.

Moore Capital sees opportunities in dominant US tech giants with global scale like Alphabet (GOOGL), which offer exposure to secular trends like digitalization at lower geopolitical risk than investing directly in emerging markets.

Furthermore, fiscal stimulus, infrastructure plans, and Fed policies have supported strong earnings growth for S&P 500 firms that benefit Moore Capital’s portfolio. The firm expects these macro factors to continue boosting large U.S. equities.

This dual focus on developing nations and American stocks helped diversify the portfolio.

Today, Moore Capital remains at the cutting edge of macro investing under Bacon’s leadership.

Continuing to identify turning points in economies worldwide before others, it has established one of the strongest long-term track records in the industry.

From humble beginnings, Louis Bacon’s vision and skills have built Moore Capital into a global macro hedge fund titan.

Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

This portfolio analysis highlights the same insights we share with our FA Alpha Members. To find out more, visit our website.

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