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.










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