The best trader in the world

"An investment is just a short-term trade that's gone wrong." - Michael Platt

Two decades apart two young men graduated from the London School of Economics after studying economics and maths and joined the fixed-income trading desks of two of the world’s largest investment banks – JP Morgan and Citi. Both men came from two of the UK’s least affluent areas. One grew up in Preston in the North of England and the other in the East of London. Both men claimed to be the “best trader in the world”. But who was the better trader – Mike Platt or Gary Stevenson?

Gary’s story is now well known. He may be short of practical solutions, but no one can deny how media-savvy Gary is. He understood the power of passion, big ideas, big claims about his career achievements, and being someone relatable. To be fair, Gary said he was the most profitable trader at Citibank during 2011, so only one year and one bank. Stevenson asserts he made $35m of revenues and got paid a bonus of $2.5m. But here’s the thing. Citi’s revenues from trading were more than $15bn in 2011 and in a firm of a thousand other traders’ Stevenson’s P&L was nowhere near the most profitable. Andy Hall famously got paid a $100m bonus by Citi in commodity trading a few years earlier.

In 2019 Mike Platt made a similar claim. After a bottle of wine - and like a cheeky kid or hedge fund billionaire that no longer has clients and is a family office - Platt told a celebrity following cab driver in a video that “I am the highest earning person in the world of finance”. The video went viral and was unusual for the usually publicity-shy Platt. That year Platt made $2bn according to Forbes magazine. His returns since have been so good that Forbes estimates he is the richest person in the UK with an estimated net worth of $18 billion. To go back to our comparison with Gary Stevenson, while still at JP Morgan in the late nineties, Mike Platt led a team that generated $500 million in revenues in one year.

Platt’s long-term track record supports his bragging rights. Is he the best trader in the world ever? George Soros, Stanley Druckenmiller, Stevie Cohen, and others may have something to say about that.

But is Mike Platt a macro wizard like some of those names or is he more of a risk manager in the Citadel and Millennium pod shop model?

How do Mike Platt and BlueCrest trade?

Platt believes in specialists rather than generalists. In his JP Morgan days, he ran Eurozone interest rate derivatives, and he is still at heart an interest rate trader. In the early days of BlueCrest, he was a significant portion of the P&L of the firm but as it grew and particularly in recent years his trading book became a smaller and smaller part of the firm. This is very different in comparison to the macro hedge fund geniuses that dominated the hedge fund industry’s early years.

Platt also differs from these industry giants in that he is largely a “spread” trader looking to capture discrepancies in the prices of related assets like interest contracts of different maturities rather than taking massive directional bets such as the legendary George Soros and Stanley Druckenmiller bet that broke the British Pound in 1992. The tendency to take big directional bets extends well beyond just macro funds. John Paulson was largely known as an event-driven arbitrage fund until his spectacularly successful bet shorting subprime from 2006 onwards. Similarly, the most successful equity long-short hedge funds such as the Tiger Cubs or the likes of Chris Hohn at TCI are known for making concentrated bets on a small number of stocks and having large net long exposure to stock markets going up.

The focus on spread trades rather than big directional bets extends well beyond Platt to the traders he hires at BlueCrest. This combined with a focus on liquid instruments such as futures allows Platt and his team to use significant amounts of leverage. Platt’s love of using futures extended so far that he agreed to appear in an advertisement for the CME in 2007.

As well as his focus on spreads and specialists, Platt and BlueCrest have many other characteristics similar to pod shops. Whether it is his love for hiring market makers rather than analysts or hatred of losses with a codified process where he starts to pull capital allocated to traders if they are down 3%, closes their trading books if they are down another 3% (total 6%) and then auctions their positions internally to other traders, Platt and BlueCrest have been run very much in the pod shop model. His investment performance numbers may illustrate volatility in returns but there have been very few drawdowns even in tough market conditions. When there have been drawdowns these are rarely more than 5%.

On diversification and risk, in 2010 BlueCrest CFO Andrew Dodd told the hedge fund journal that Mike Platt was only one of 40 traders within the flagship Capital International discretionary fund and Platt had the largest trading book, but it was only 10% of the fund. Dodd said of Platt “Our setup is really an institutionalised version of Mike’s own personal style of trading…He trades a very diversified book. Every trader that works for the fund has their own capital allocation and there is no ambiguity about who each trade belongs to. There is very clear accountability and tight stop losses. You’ll see Mike exit trades very quickly and the institutionalisation of that is through the stop loss rules.” BlueCrest Diversifies

People close to the firm say that despite these drawdown rules, Platt has always used a high level of discretion in shutting down trading books when losses build. If it’s a space, he knows well and a trader he likes his risk tolerances can be very different, relative to the opposite scenario. In this way and also their ability to put up supersized returns in any given year Platt and BlueCrest remind me much more of Citadel than Millennium. A focus on only trading very liquid contracts allows not just leverage opportunities but the ability of BlueCrest’s central risk team to monitor risk and unwind positions without gap risk.

In a Bloomberg interview from 2011 Platt talked about how he liked to sit out any market meltdown as positions could trade against you owing to liquidity and that where the real money was made was in the bounce back. The publicity-shy Platt rarely gives interviews, and the best interview was with Jack Schwager in 2013 Hedge Fund Market Wizards where he talks about how traders understand that the market is always right and how Platt’s ideal hire is one starting work at “seven o’clock on Sunday morning when his kids are still in bed, and logs on to a poker site so that he can pick off the US drunks coming home on Saturday night.”

Where BlueCrest has differed from top pod shops is not the diversification across different pods or in BlueCrest’s case different trading books but the diversification across asset classes. Mike Platt’s core Capital International Fund unsurprisingly had a high exposure to G3 interest rate trading but was also big in fixed income relative value, and FX volatility. But compare this to Citadel and Millennium where there are huge fundamental equities and quant equities businesses. BlueCrest tried several times to get into fundamental equities, struggled to generate adequate returns, and then exited the space. Moreover, BlueCrest’s entry into commodities has been mixed relative to pod shops. Platt struggles to extend risk limits in areas he doesn’t understand. Contrast this with Ken Griffin’s amazing expansion at Citadel into commodities, which is not necessarily the down 3%, and capital allocated will be reduced sort of investing given so much of it is physical energy. Citadel is from Mars and Millennium is from Venus

Running client money

BlueCrest launched in 2000. In late 2003 Man Group acquired 25% of BlueCrest for $170m. Assets under management were $3bn at the time. The genesis of the deal was that Man Group had wanted BlueCrest for investment capacity to fuel their structured products. But when Peter Clarke became Man Group CEO in early 2007 the relationship between Platt and Man Group became fractious. Platt was not keen to give his precious capacity to Man Group. In early 2011 Man Group sold back to BlueCrest management its 25% stake for $633m. BlueCrest had assets under management (AUM) of $25 billion at the time. BlueCrest’s AUM would peak at $37bn in 2013.

The engine of BlueCrest’s growth was twofold. Its core fixed income discretionary fund run by Mike Platt was around half of the business and the systematic funds run by Leda Braga were the other half of assets. Both strategies evolved over time but around their core skills. Platt would be long a certain duration of interest rate futures and short another in the same curve. At the same time, Braga’s systematic fund was largely a trend-follower making directional bets based on prior price action trends. In that way, they were very different and complementary.

Platt’s discretionary funds generated returns net of fees of 11% in the 15 years between 2000 and 2015. He managed to achieve this through some tough market environments and with low levels of volatility. He came out of the gate strong during the dot com bubble on the backdrop of falling interest rates. But the defining moment was the Global Financial Crisis where Platt was relatively unique in not losing money in 2008 and making huge amounts of money in 2009. Although the latter was a recovery year there was huge stress that built at the start of the year until the March 2009 bottom. But as Rudyard Kipling' said, "If you can keep your head when all about you are losing theirs."

But the era of quantitative easing and zero interest rates proved to be tough for Platt and his master fund, which barely made any returns for the next 4 years. This materially dragged down his long-term track record. A rare big down month was seen in January 2015 as Platt was caught on the wrong side of the Swiss Franc unpegging. Redemptions picked up and BlueCrest’s AUM in discretionary funds halved to $9bn. At the same time, there was a hugely controversial move of BlueCrest opening an internal fund that was running Platt’s own money with more risk taken and much better returns. It would cherry-pick many of the best traders at the firm and would lead to not just reputational damage but a major regulatory investigation and a large fine many years later.

Perhaps encouraged by the higher returns of the internal fund, discouraged by the performance and huge redemptions of his client funds, or unhappy with his 2 and 20 fee structure Platt decided it was time for a change. He returned around $8bn to clients when he turned into a family office at the end of 2015 with $1bn of internal money, virtually all his own.

Systematic trend-following strategies are inherently volatile, but Platt’s partner Braga managed a similar feat to him during the Global Financial Crisis albeit in the opposite order. She had a monster 2008 up 45% catching the sell-off trend and doing even better than their peers. But in 2009 when many other leading trend-followers got caught in the inversion, Braga’s BlueTrend fund was up 3% beating its peers. Consequently, BlueTrend had averaged around 20% per year in its first 6 years and was attracting clients faster than some of its more seasoned competitors.

The lost decade for CTA’s (commodity trading advisor) trend-following hedge funds from 2009 to 2019 when government interventions dampened trends, hit BlueTrend’s performance just like its peers. By the time BlueTrend and its smaller sister fund BlueMatrix spun out of BlueCrest under the new name of Systematica in January 2015, its AUM had declined to less than $9bn. This was almost half of its peak level. The annualized net returns of the trend-follower had also fallen to 11% over the 2004 to 2014 period.

The family office

Since becoming a family office in 2015, we have seen eye-watering net returns being reported by Bloomberg for BlueCrest. These are net returns of 50% in 2016, 54% in 2017, 25% in 2018, 50% in 2019, 95% in 2020, 30% in 2021, 153% in 2022, 20% in 2023, 38% in 2024 and already up 20% in 2025. Billionaire Michael Platt's BlueCrest Gained 38% in 2024 - Bloomberg

Although Bloomberg articles talk about the BlueCrest family office running the money of Platt and his partners, court documents from 2022 say that all of BlueCrest the family office’s money comes from Platt and his CFO. Former BlueCrest traders in court testimony talked about Platt being the only client in the family office. Taking Platt’s one billion dollars plus of personal funds in BlueCrest and compounding it at the 50% net return per annum over the decade would give us a gigantic $55bn of funds today. Moreover, in court documents from 2022, BlueCrest says it had equity capital of $3.9bn a fraction of what the one billion dollars would have reached given the investment returns numbers above (61% per annum net returns) reported by Bloomberg from 2015 to 2022.

So, what has happened?

Although Platt and his team have never given full disclosure it would be sensible to assume that after paying his portfolio managers 20% (net of the infrastructure costs they consume) of their investment return, Mike Platt sweeps out most of the increased equity capital through regular dividends. Platt is an avid lover of modern art but doesn’t appear on the auction circuit like Stevie Cohen. Neither has he bought a baseball team. What he has done with all the money is a mystery but it is unlikely that it has just been sitting at BlueCrest compounding at these eye-watering percentages. The 2022 court filing also disclosed that in March 2020 BlueCrest lost $750m, out of its $1bn of cash reserves putting the firm near having to liquidate trading books to raise capital.

When Platt moved to a family office, he highlighted that this gave him scope to take bigger risks and run higher leverage than hedge funds. In the 2022 court document where BlueCrest discloses equity capital of $3.9bn, it mentions that the capital it allocates to its traders is $15bn. This is of course similar to pod shops like Citadel and Millennium where pods are not given client cash but allocated capital with some leverage often run by the central risk team. The ratio is also in line with peers. But where leverage may be higher is in the gross exposures of individual traders. Platt has always highlighted how he likes trading futures, which have high levels of inherent leverage. For instance, at the CME futures margins range typically between 3-12% depending on the contract involved and the volatility at the time.

How aggressively BlueCrest manages excess equity capital and uses futures relative to hedge funds can have a significant impact on how comparable its investment returns are. Platt himself cited the unwillingness of external clients to put up with the amount of leverage he wanted to use as one of several reasons why he thought it was better to be a family office than a hedge fund.

There is no doubt that Mike Platt is one of the best traders and more so risk managers of his generation. The equity capital base of BlueCrest has likely grown since 2022 even with dividends but it is still likely to be a small fraction of the $37bn of AUM that BlueCrest had it’s peak in 2013.

But today BlueCrest has more than 170 different pods with an average size of two investment professionals. The FT says the headcount at BlueCrest is around 600. BlueCrest expansion In its heyday in 2013 when it was one of the largest hedge funds in the world BlueCrest had a similar headcount. What are all those traders doing on a materially smaller equity base if BlueCrest is not materially more leveraged than when it was a hedge fund?

BlueCrest’s headcount today in terms of the number of investment professionals and total headcount is on par with a major multi-manager pod shop like ExodusPoint, which manages $12bn of assets under management.