Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets, Revised and Updated

Chapter 12

The Stock Operator

Scott Bessent

Bessent Capital New York City

Scott Bessent has trained under some of the best-known traders, including George Soros, Stanley Druckenmiller, Nick Roditi, Jim Rogers, and Jim Chanos. He has traded through some seminal periods in the evolution of global markets and the hedge fund business, perhaps most notably the transition from a few dominating mega-funds such as Soros and Tiger to the launch of a myriad of smaller funds like his own. While he manages exclusively his own money now, he is able to address a worrying trend in hedge funds: giving investors what they want as opposed to sticking to what one does best. After he left Soros Fund Management in 2000, Bessent did not heed the advice he received at the time from hedge fund legend Robert Wilson. Wilson advised Bessent against taking any outside capital because in order to be up 100 percent, you have to be willing to be down 20 percent, and it’s not possible to go down 20 with other people’s money.

Still, Bessent launched his own fund with $1 billion of investor capital in the fall of 2000. After his first real drawdown, he had to confront the exit of hot money and all the difficulties that entails. He has since heeded the advice of Wilson and returned all outside investor capital. Pressure to give investors what they want can compromise any trading style.

I interviewed Bessent on a cold New York winter afternoon. Inside the steel and glass tower on Fifth Avenue in midtown Manhattan ...