John Henry buying the Newspaper Drawdown?

John Henry must not be hurting too bad from his eponymous managed futures program’s closing down in 2012, as the futures industry hall of famer recently made headlines for buying the Boston Globe from the New York Times for $70 Million (on the heels of Amazon’s Bezos buying the Washington Post – what’s with billionaires buying newspapers). Henry also got married somewhere between all that.

John HenryPhoto Courtesy: Boston Magazine

We in the biz all respect John Henry (managing $3 Billion at one point is no small feat), even if we question whether he took his eye off the managed futures ball when expanding his empire into the ownership of sports teams (Florida Marlins, Boston Red Sox, a NASCAR team, and an English Soccer Squad). If you don’t know his story, we covered it in our John Henry autopsy newsletter here.

And while the days of hearing John Henry’s name mentioned alongside managed futures or commodities trading are most likely done with, it was nice to see a few publications thrust managed futures into the spotlight, however fleetingly, in various correct to not quite close descriptions of how Henry made his fortune.

Bloomberg:

“By 22, he was ejected from the blackjack tables in Las Vegas for counting cards. He began trading corn and soybean futures to protect his family soybean business after his father died when he was 25. Henry set up a small office in Irvine, California, in 1981 investing family money from the farm in agricultural commodities, expanding into other types of investments and eventually taking on outside clients at what would become John W. Henry & Co., which is now based in Boca Raton, Florida.

The billionaire entered Major League Baseball in 1991 by acquiring 1 percent of the Yankees. In 1999, he bought control of the Florida Marlins for $158 million.”

Boston Globe:

“ A mild-mannered billionaire who made his fortune in managing funds and trading commodities,”

Washington Post:

“Henry, who made his money by taking a mathematical approach to the commodities markets, brought a similar method to the baseball diamond, hiring the statistically savvy Theo Epstein, then 28 years-old, as the youngest general manager in baseball history.”

Perhaps he is taking his managed futures experience of cyclical performance and big drawdowns turning into big run ups into the world of newspapers. He had numerous -20% or worse drawdowns in his program’s 15 year track record which he (the program) recovered from to go on to new all time highs (before the last one, which resulted in his closing it down eventually). The question that remains is does the Boston Globe represent one of the cyclical downturns one can expect a bounce back to new highs – or a secular shift to the downside like Henry’s program became in the end…

From an investment standpoint, Henry venturing into an industry without statistical data like batting averages, hits, runs, volatility, drawdowns, and rate of returns, and into the fast paced world of hourly deadlines, storytelling, and the watchdog of Boston seems a bit odd. Maybe it was a wedding present, or maybe he’s trying to buy the drawdown in the newspaper industry. Thing is – while market trends end or flatten out (causing drawdowns) in managed futures, we’re not so sure the trend towards consuming news on tablets, smart phones, and the like is anywhere near an end. Time will tell, but this sure seems like a drawdown you walk away from, not buy into.

Write a Comment

The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.