Former Long-Term Capital Employee Shys Away from Leverage, Starts Own Fund

New York (HedgeCo.Net) – David Ko, a former quantum physicist and Long-Term Capital Management employee, has set up his own hedge fund according to a report by the Wall Street Journal.

Kurtosis Capital Partners will employ a global macro strategy and hopes to attract between $100 million and $250 million initially.   Ko has partnered with Stephen Cain, once the global head of currency trading at Deutsche Asset Management. 

"Our strategy is to buy options when we think a market is going to become volatile. The closer to the dislocation, the better. Then, at the moment of highest volatility, sell," he said.

Global macro funds generally look for tiny discrepancies in the market using complex equations and mathematical solutions.  They then capitalize on those discrepancies by betting on which way they will eventually regulate. 

Ko stresses that the fund won’t be using leverage, unlike Long-Term Capital Management, which used heavy amounts of leverage that only magnified the huge losses it suffered.  LTCM infamously ended up losing close to $5 billion of investor’s money.

Prior to his hedge fund career, Ko helped to author 10 academic papers on quantum physics while studying at Oxford University.

Julie Scuderi
Senior Editor for HedgeCo.Net

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