December 1, 2008, 3:04 PM

From Louise Story, a DealBook colleague:

Paul Tudor Jones is one of the best-known, and richest, hedge fund managers in the world. But there is one thing he says he’s not: a quitter.

Even as Mr. Jones blocked investors from redeeming money from his main hedge fund for a quarter, he said he will “never quit on an investor who is willing to stay with Tudor unless we are at or above high watermark.”

As sensible as that statement may sound, it is a position that is increasingly controversial within the industry. Scores of hedge funds are down double-digits this year, and for many managers, quitting is an obvious and easier strategy. Hedge funds typically have “high watermarks,” meaning when they are down, they do not earn their fat performance fees and that the next year, they have to recover that loss before earning the fees again.

A trader who is down this year may choose to close his fund simply to get rid of the hole he has dug himself into. That forces his investors to lock in the losses from this year. In Mr. Jones’ case, his so-called BVI fund is down 5 percent so far this year. The fund had been up 7 percent at the end of June.

But Mr. Jones wrote in his letter that he is concerned about his legacy, even after 32 successful years in the industry. He described three principles that he hopes will define his record: double-digit returns on an annualized basis, no long periods of negative returns, and no quitting when times get tough.

Mr. Jones ended his letter with a quote from Admiral Richard Evelyn Byrd, an early polar explorer: “The mantle of leadership rests easily when the compass needle does not move.”

Now that so many hedge fund compasses are pointing south, it will be interesting to see how many traders follow Mr. Jones’ lead.

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