Boaz Weinstein Looking To Open Hedge Fund

What do you do when the group that you run loses $1.8 billion dollars in a single year?

That's simple. Leave the firm that you are currently with and start a hedge fund.

This is the exact path that has been chosen by Boaz Weinstein, a 35 year old trader who spent the last 11 years of his life at Deutsche Bank AG.

Weinstein rose to prominence in 2006 and 2007, when his "Saba" trading group at Deutsche Bank netted over $1.5 billion dollars in profits. Weinstein profited handsomely from these stellar results, banking an estimated $40 million dollars per year during his impressive run in 2006 and 2007.

Things came unhinged in late 2008 for Weinstein and his group. According to the Wall Street Journal, the "Saba" group bet that the credit crisis was contained and bought corporate bonds or loans, as well as credit-default swaps.

When the Fed brokered a deal for Bear Stearns, Weinstein and his group added to their positions, feeling as though corporate bonds were an even safer bet, considering that the Fed was clearly interested in stabilizing credit markets.

As you well know, the markets imploded in the fourth quarter of 2008, and Weinstein's holdings plummeted as well.

Weinstein implored the company to allow him to buy "more swaps to protect his positions", insisting that the proper strategy was to "get as flat as possible to the market". Risk managers at the company objected, and ended up instructing the "Saba" group to scale back or wind down their positions entirely.

Was Weinstein an otherwise remarkable trader who just happened to suffer through one really bad three or four month stretch? (his group was reportedly profitable right up until September)

Or is he a great example of how a bull market makes everyone look like a genius?

Whatever the case may be, Weinstein has now left the firm and is actively seeking to raise funds for a brand new hedge fund.

In the end, the "Saba" group ended up losing $1.8 billion dollars in 2008, and Boaz Weinstein will be attempting to navigate his way through the uncertain waters of the hedge fund industry.

Source: Deutsche Bank Fallen Trader Left Behind $1.8 Billion Dollar Hole

Filed under: Hedge Fund News | Trader Profiles