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Who is David Gorton, new darling of Brevan Howard?

David Gorton, quantitative hedge fund manager, has landed one of the most sought-after opportunities in Mayfair: leading Brevan Howard’s first foray into algo-driven investing.

The Financial Times says that Brevan gave Gorton and a ‘team’ $300m to set up the ‘Brevan Howard Systematic Trading Fund’ back in March. The fund, which is a joint venture run by Gorton’s new firm, DG Systematic, has returned 9.3% since March.

The move is significant because a) Brevan Howard doesn’t usually do algo trading and b) it doesn’t often seed joint ventures, preferring to work very closely with internal traders to whom it can apply its very rigorous risk controls (although Brevan Howard said that DG Systematic will be on the same platform and that these risk controls will still apply).

Gorton, therefore, appears to have lucked in. His career shows the benefits of starting off at a solid-but-not-necessarily-prestigious name, carving a niche (rates), and staying with it.

A former trader at Chemical Bank

Gorton’s career began 24 years ago at Chemical Bank, where he reportedly started out as a bond trader, specialised in forward rate agreements, and became joint head of Eurobond trading.

A former trader at HSBC

After spending three years at Chemical Bank, Gorton appears to have gone to HSBC where he continued to specialise in forward rates agreements, before being promoted to Chief Dealer for the US, responsible for all rates risk, in 1992.

A former CIO at an internal fund with JPMorgan

Gorton made his first hedge fund move in 2002, back in the days when banks could still run funds of their own with impunity,

JPMorgan hired him as chief investment officer to run its London Diversified Fund. Gorton and his team were successful, allegedly making 550m a year for the bank.

A former casualty

In 2002, London Diversified spun out on its own. Initially, it did well. In 2004, Gorton and two others are said to have shared a 55m payout and the business expanded to around 70 people.

In 2008, however, London Diversified hit a rut: assets under management plummeted nearly 30%. In the year ending August 31st 2009 income fell 76%, no performance fee was charged and 13 partners left.

Gorton’s emergence as Alan Howard’s new favourite suggest he may have given up on London Diversified. It also reflects that the resilience of hedge fund careers, where a few years’ poor performance and an unobtainable high water mark can be eclipsed with a new fund.

Comments (7)

  1. Ah how the mighty have fallen.

  2. at least they once rose AliDesai. Better be a has been than a never was …

    JediMindTricks Reply
  3. a rising tide lifts all boats, and it’s not until the tide recedes that you find out who has been swimming in very small speedos – as my friend Charles says. He now lives in the small provincial town where I live and I would urge David to come and join us. He can bring his friend David Standing along.

  4. no one is BH darling – and there will never be a darling

  5. It isn’t Brevan’s first foray into algo-driven investing, just the first one they have press released.
    The guys currently at PGR were BH’s first attempt…

  6. Not a bad life, you mess-up your fund but then you get picked up and dusted off by brevan…………if that’s how the mighty fall, I wanna fall too!!!!

    i’ll fall too Reply
  7. Say what you like, or indeed believe to be true, however as a life long friend of David Gorton,
    I can inform you that he is of great stature, honest, but not altogether incapable of taking prisoners. Good luck to him.

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