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Hedge fund manager Karsch planning a consulting firm -sources
August 29, 2013 / 4:27 PM / 4 years ago

Hedge fund manager Karsch planning a consulting firm -sources

BOSTON, Aug 29 (Reuters) - Hedge fund manager Michael Karsch, who is liquidating his own fund, is readying a new consulting business that will likely count legendary investor Stanley Druckenmiller among its clients, three people familiar with the matter said on Thursday.

Karsch referred to the “next chapter” of his career in a letter he sent to clients on Wednesday when he informed them he would be closing down Karsch Capital Management, which has roughly $2 billion in assets.

The 45-year-old fund manager is now working on winding down his 13-year-old fund, which employs 13 investment professionals, according to a regulatory filing made earlier this year. “It is time for me to take a step back, reflect on my experiences and begin to think about the next chapter of my career,” he wrote in the letter, which was seen by Reuters.

But he is already laying the groundwork for the new business which he expects to have up and running in the coming months, the people said.

One of his first clients may be Druckenmiller, the billionaire investor known as the key architect of George Soros’s famous bet against the British pound in 1992, the people said.

Karsch was not available for comment, and Druckenmiller could not be reached.

While it is unclear exactly what Karsch’s business will offer its clients, he could provide advice on a range of investment topics from private equity to individual stock picks.

In the three years since Druckenmiller shocked the hedge fund industry with news that he was closing down his $12 billion hedge fund Duquesne Capital Management, he has stayed in the business as a private investor but largely out of sight.

This year, however, he has taken on a slightly more public profile, publishing an opinion piece in The Wall Street Journal and appearing at the Ira Sohn investment conference, where he predicted an end to the commodities rally and railed on Federal Reserve Chairman Ben Bernanke’s monetary policy.

Druckenmiller, who posted average annual returns of 30 percent for decades, has known Karsch ever since the two worked together at Soros Fund Management.

Druckenmiller was Soros’s chief investment officer and Karsch was responsible for investments in value stocks.

While the men will be working together again in a way, there are no plans for Druckenmiller, now 60, to try and rebuild his family office into a hedge fund that would accept outside money, one person familiar with Druckenmiller’s thinking said.

As Druckenmiller’s legend loomed large in his last years at the hedge fund Duquesne Capital, he acknowledged that the demands of managing outsiders’ money were taking a personal toll. At the time he announced the closure of his fund in August 2010, he said he was unhappy with the fund’s performance.

As chief investment officer of Duquesne Family Office, Druckenmiller still comes into his midtown Manhattan office most days of the week but permits himself a slightly more leisurely schedule, especially during the summer.

At the end of the second quarter, Duquesne Family Office owned Google as the fund’s biggest holding and also had large investments in Procter & Gamble, according to regulatory filings.

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