Billionaire Stanley Druckenmiller to shut down Duquesne hedge fund

Stanley Druckenmiller, one of the most successful hedge fund managers ever, has flirted with the idea of quitting several times in the past 10 years. A month ago, he got serious.

That's when friend Johann Rupert invited him to play at the Alfred Dunhill Links Championship in Scotland, a pro-am golf tournament in October. Druckenmiller, an avid golfer, declined.

He couldn't leave the office, given October's history of volatile markets, he told Rupert, chief executive of Compagnie Financiere Richemont, the world's largest jewelry maker.

"Are you crazy?" was Rupert's reply, according to Druckenmiller. "You've been doing this for 30 years. You are a billionaire. You can't take a couple of days off to play golf?"

"I'd had that same thought a hundred times," Druckenmiller said in an interview announcing his decision to retire after a 30-year career in which he amassed one of the best trading records in the hedge fund industry and made $1 billion for George Soros by forcing a devaluation of the British pound in 1992. Almost every family vacation, he said, had been interrupted by a work emergency.

"For 30 years I've been responsible for managing client money and it's been a joy, but at some point I need to move on," Druckenmiller said. "Thirty years is enough."

Druckenmiller, 57, said he's frustrated by his failure in the past three years to match returns that had averaged 30 percent annually since 1986. His Duquesne Capital Management, which oversees $12 billion and has never had a losing year, is down 5 percent in 2010.

"You may remember that I chose to leave Soros Fund Management 10 years ago because the challenge of managing an enormous amount of capital was having a clear impact on my ability to perform, as well as my state of being," Druckenmiller wrote to his 100 clients. "Unfortunately, as Duquesne has grown, these factors have again emerged."

Druckenmiller built his reputation making large bets on macroeconomic themes that he spotted before others, a skill he shares with legendary traders including Bruce Kovner, Michael Steinhardt and Soros, the Hungarian-born billionaire and his former boss. The decision to shut Duquesne suggests that in an era in which the biggest hedge funds oversee $30 billion and are adding even more assets, they may no longer be able to routinely outperform conventional funds by wide margins.

Duquesne returned about 11 percent in 2008, when hedge funds on average lost a record 19 percent. It rose about 10 percent in 2009, when the average gain was 20 percent.

"I felt I missed a lot of opportunities in 2008 and 2009 and a huge move in bonds this year," he said during the interview in his New York office, on 57th Street overlooking Central Park.

In the past three years, his returns have trailed those of the 10 portfolio managers who manage about half of Duquesne's capital -- a first.