Hedge Hunters: After the Credit Crisis, How Hedge Fund Masters Survived

I'm not an investment maven. Would that I had a few million in disposal income to hand over to one of these guys. I am, nonetheless, fascinated by risk-takers; their confidence and smarts--and the journeys that took them to Wall Street. It interests me that Lee Ainslie's years as a student at the traditional sounding Virginia Episcopal School where his father was headmaster likely contributed to making him the disciplined traditionalist he is today. And I couldn't help but smile when reading that Talmud scholar Jeffrey Schachter got the chutzpah to start his own firm from rapper LL Cool J. These are interesting people in an interesting business in interesting times. Meanwhile, the unique opportunity to get a peek at their investment strategies greatly added to my market knowledge. So maybe one day I'll have a portfolio big enough to go hedge hunting myself. Ms. Burton's clear and entertaining writing style sheds light on the new Masters of the Universe.

Katherine Burton (Bloomberg News) has produced a classic, by interviewing hedge fund masters, that is informatory, entertaining and revelatory. Eighteen chapters cover as many hedge fund managers including stars like Julian Robertson, Jim Chanos. Marc Lasry of Avenue Capital merits a chapter, as does Craig Effron of Scoggin. There is a fantastic account of how Effron bought $150mm debt of the Republic of Congo from Brazil at $.05 on the dollar, spent $11mm in legal bills and collected $70mm from the reluctant Congolese. We learn that John Armitage does not like to short stocks and that Effron prefers buying puts on the S & P 500 index, since "fifteen stocks that you short, if you do, could all stay put on a day when the index drops 2%". You get a unique insight into how some fund managers alter the fee strucutre (1% and 20% or 1% and 15%) and the implications of the make-whole clause on staff retention, the ability to pay salaries, and to stay afloat. A fantastic introduction, based on views of Mark Yusko, rate attributes that it takes to be the best in the business: Independence, Guts, Humility and intellectual honesty, Connections, Ambitions, Smarts, Respect for Employees, Integrity. Interestingly there are red flags too: "The Red Ferrari Syndrome", "Calling In Rich", "Personal Tragedy". This is much more than a investment classic. It is a entertaining and readable account, (assuming very little knowledge of financial jargon besides what a reader of the Wall Street Journal or Bloomberg News would be familiar with,) providing unprecedented access to the business models that comprise successful funds with consistent returns over decades. Top managers' views of risk control, or "looking out for what is around the corner" in addition to intense study of "fundamentals for stock-picking" are presented. It is this awareness of risk and leverage that separate the funds that blow-up from the funds that consistently perform. The quality of research and the standard of writing is high. This book is to hedge fund managers and to this decade what Jack Schwager's "Market Wizards" was to option traders and the last decade. Highly enjoyable, and a pleasure to recommend.

This is a book about investment style, not specific trading techniques. I enjoyed this book because it is more inspirational than educational, it is a good book for a beginner investor or trader, if you want a volume on trading techniques consider other works such as Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders or even Jim Cramer's Real Money: Sane Investing in an Insane World. Burton is able to get the hedge fund managers to discuss some of their greatest losses and failures but also the lessons they learned, she makes a point to share these experiences so hopefully the reader can benefit and avoid the same mistakes. This book wasn't a hard or boring read for myself and my associates who just read a few random chapters, the author goes into enough detail about every managers background and beginnings to help the reader understand the perspective of their successful money management. Let's be clear, a hedge fund manager isn't going to provide their proprietary trading techniques to the general public or to the reader of this book. Instead, this book will provide details of trading styles and after reading numerous profiles you'll notice some of the recurring themes of successful fund managers, which are: 1. Disciplined entry and exits 2. Avoiding margin borrowing 3. Seek talented staff and smarter mentors 4. When in doubt, stay out 5. Being early is a euphemism for being wrong The author spends at least 10 pages on each profile, collecting inspiring words and anecdotal explanations to successful trading. Most of us will never have enough money to meet the minimum investment requirements of these fund managers, but we can still benefit from their experiences.

Hedge Hunters is the best book about the hedge fund industry to date...and likely a classic. Katherine Burton, who covers hedge funds every day on her beat at Bloomberg News, is by far the most plugged in and skilled writer working in financial journalism today. It is well known and makes sense that the best hedge fund managers are famous for not wanting to talk to any reporter, for any reason, ever. Period. The fact Ms. Burton got the cream of the current crop to sit down with her tells you they she has earned their respect. And, in writing this book, she has earned mine. Of course...I love data, charts, diagrams, profit and loss reports, exotic mathematics, and complexity. But there are hundreds, if not thousands, of books available to meet my needs in these ares. Hedge Hunters is different. It rightfully focuses on the human dimension of the hedge fund industry - the character attributes of those at the top of it and their thought processes. It provides a much needed break from the scores of entrancing, dizzying, but ultimately forgettable books about finance. It rightfully elevates people over formulas, ideas over equations, and wisdom over information. Ms. Burton is a very gifted writer. She is extremely talented at observation, description and story telling. She has a very wry wit, and is often hilarious. Hedge Hunters reminds me of Michael Lewis's "Liar's Poker"...absent the testosterone and ego saturated hijinks of his subjects. You'll have to do some work to extract all the valuable guidance Hedge Hunters can provide. But, to me, that's what reading...and life... is all about.

This is a wonderful look at the world of hedge funds and the players who built an industry. Ms. Burton has achieved unusual and deep access to many of the leading and formative figures of the past 20 years. It helps that she has a great understanding of the hedge world and that these luminaries trust her enough to be frank and informative -- in ways not usually associated with this asset class. Ms. Burton's easy writing style and disarming way with her subjects has resulted in a very readable and interesting book.