The 46-year-old money manager has instead been focusing his energies on turning his fledgling firm, Rokos Capital Management, into a hedge fund giant.
He plans to reopen his fund to investors early this year, say two people briefed on the matter, and is looking to raise more than $2 billion.
That would put the assets he manages at more than $6 billion and make him one of the few rising stars in an industry that has been in a funk of late.
One of the most successful hedge fund investors, Richard Perry, for example, announced in September that he was closing his flagship fund, after steep losses. In August, Paul Tudor Jones, one of the oldest names in the business, was said to be cutting 15 percent of the Tudor Investment Corporation’s global work force and closing its trading desk in Singapore.
Over all, closures of hedge funds are on pace to eclipse hedge fund start-ups in 2016 for the second consecutive year, paving the way for the highest number of liquidations since the financial crisis in 2008, according to data from Hedge Fund Research.
While others are retrenching, Mr. Rokos is building. He declined to be interviewed for this article.
Some think he may one day have a company that rivals his former firm, Brevan Howard Asset Management. A founding partner of the firm that is now among Europe’s biggest hedge funds — his name is the “R” in Brevan — he worked there for a decade before falling out for a time with Alan Howard, the billionaire investor and founder of the firm.
The two are now reconciled and Mr. Howard’s firm even took a financial interest in Mr. Rokos’s venture when it started up in October 2015.
But while Mr. Howard has lagged lately, with the Brevan Howard flagship fund rising just 3 percent last year after two down years, Mr. Rokos has soared. His fund rose 20 percent in 2016.
And now Mr. Rokos is preparing for a big 2017.
Raising new capital would allow Mr. Rokos, whose specialty is trading interest rates, to expand his fund’s footprint in areas like emerging markets even though it was a trade closer to home that thrust Mr. Rokos into the limelight this year.
In the days before Britons voted on whether to stay in the European Union, Mr. Rokos had told associates that he expected the “remain” vote to win.
He was one of a number of hedge fund managers who predicted the vote incorrectly, and yet his fund prospered in late June after Britain voted to leave the European Union. The day after the vote, Mr. Rokos’s fund gained more than 2.5 percent in a single day, one of the people briefed on the matter said.
His ability to make money even when caught flat-footed, his admirers say, is a sign of his nimbleness as a trader.
What propelled his hedge fund to outsize gains was a series of derivatives trades. He took advantage of a mispricing of assets in the volatility markets, which allows traders to bet on the sharpness of the market’s zigs and zags.
He also bought put options that offered a big payout if the pound sterling dropped below a certain level, that person said. In the days before the June 23 vote, the expectations that Britons would vote to remain in the European Union was running so high that put options were cheap, reflecting what seemed to be a low probability.
All it took was a little money to amass a big position that would be enormously profitable if the pound fell.
Credit
Michael Nagle/Bloomberg
The day after the vote for Brexit, the pound plunged, putting Mr. Rokos’s options in the money.
It was a long way from his more humble origins. Mr. Rokos was at a state primary school outside London when a headmaster spotted his promise, particularly in subjects like math and science. He recommended that Mr. Rokos be entered for a scholarship to Eton College, an exclusive boys school that was founded by King Henry VI in 1440.
Among Eton’s illustrious roster of alumni are David Cameron, the former prime minister, and Boris Johnson, the current foreign secretary, both conservatives. Mr. Rokos has been a major donor to the Conservative Party, giving, since 2009, nearly £1.9 million, as of Sept. 30, according to records of Britain’s Electoral Commission.
In 1989, Mr. Rokos entered Pembroke College at Oxford University. Three years later, he graduated with a first-class honors degree in mathematics. His affection for his alma mater runs deep. He was the lead benefactor for a fund-raising campaign the college ran several years ago, leading the school to name one of the four quadrangles, around which college buildings are clustered, in his name. He also funds scholarships at both Oxford and Eton.
After finishing his schooling, Mr. Rokos headed to the City, London’s financial district, joining Goldman Sachs in October 1993 after a short stint at UBS. Mr. Rokos’s talent as a trader first surfaced at Goldman. In three years working for the investment bank in London, he generated $165 million in trading profits, according to two people briefed on the situation.
In late 1997, he moved to Credit Suisse, where he met Mr. Howard, who ran a close-knit group of proprietary traders. When Mr. Howard left the Swiss bank in 2002, Mr. Rokos was one of his lieutenants who followed him out and helped set up Brevan Howard, a hedge fund focused on trading fixed-income securities.
Mr. Rokos’s trades powered the fund to huge profits — and sometimes big losses. Court documents that were filed as part of litigation between Brevan Howard and Mr. Rokos say he made $4 billion for the firm, but he lost nearly $400 million in 2012, the year he left. The spring and summer of 2012 were a rocky time for macro investing. Mr. Rokos left Brevan Howard at the end of August.
For a couple of years after Mr. Rokos quit Brevan Howard, he managed his own money, making profits in trading Greek debt, among other areas.
But, in 2014, when he decided he wanted to set up his own hedge fund, he asked his lawyers if his contract with Brevan Howard allowed him to trade on behalf of investors, a person briefed on the situation said. The lawyers said they did not think he could trade. Mr. Rokos was under a noncompete agreement, which effectively meant that he could not manage money for outside investors for five years after his departure.
When Mr. Rokos formally asked Brevan Howard if he could manage money, he was turned down.
That threw into public view the spat between the reticent Mr. Rokos and the publicity-shy Mr. Howard. Mr. Rokos filed a lawsuit against Brevan Howard on the Isle of Jersey and, in January 2015, the two parties settled, paving the way for Mr. Rokos to start his hedge fund. One of his cornerstone investors was the Blackstone Group, the American private equity giant, which committed in May 2015, six months before his fund’s start, to put in $500 million.
Despite his low-key demeanor, Mr. Rokos is zealous about building a hedge fund business, much like his mentor, Mr. Howard. He is a workaholic, accessible on the phone to investors around the clock.
That leaves him with little time for lavish home renovations. It is a good thing that he has completed overhauling another house not far from Hyde Park in London.
The property, a mews house which in olden times would have been used to stable horses, is connected to his adjoining home, a townhouse, and offers a subterranean fitness suite and cardio area, according to planning documents.
