Chapter 5

Craig Effron

A Grip on Risk

IT'S BEEN TWO DECADES since Craig Effron traded gold, silver, and crude oil at the New York Mercantile Exchange, but the lessons he learned in ten years in the pits, where decisions are made at a manic pace, still dominate his approach to money management. His $3.25 billion hedge fund, Scoggin Capital Management, buys and sells the stocks and bonds primarily of companies that are merging, spinning off units, or going through financially tough times. Between 1988, the year he started the fund, and August 1, 2007, he produced average annual returns of 18.2 percent a year, after fees and using no borrowed money. He had only one losing year, 2002, when he was down 1.3 percent. His returns are not correlated to ...

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