Customer Reviews

Hedge Hunters: Hedge Fund Masters on the Rewards, the Risk, and the Reckoning (Bloomberg)

5 star:		(15)
4 star:		(18)
3 star:		(15)
2 star:		(3)
1 star:		(3)

 

 

I ordered this book actually thinking that I might gain some insights into how hedge funds work and perhaps to learn something about investing that I didn't already know. Instead I ended up reading a book that seemed just like one of those "market wizards" books from back in the 1980's.

A generic hedge fund manager's bio might go like this. "Joe Money" grew up in an affluent family where he got interested in investing. Then he went to an exclusive college and got a job in a Wall Street company. A few years later he got to manage a fund, and then a few years later he left that company and started his own fund. Now he sits in an office decorated with (insert decorations here) and gives this advice:

Be prepared to make mistakes.

Know when to stick to your convictions and when to walk away (like Kenny Rogers in "The Gambler". Ya gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to run.)

The better you know the investment you're making, the greater your conviction will be.

Don't stake more than a certain percentage of your portfolio on a single invesment. (Or, don't put all your eggs in one basket).

Study the leadership of the company, not just the financials.

Buy into industries that everyone else hates.

Look for new products that everyone has to have. Buy stock in the company that makes them.

Seek out companies whose shares are undervalued compared to earnings and other financial measures.

And there's more. More generalities that I've read several times before and have appeared in investing books for decades. I was rather dissappointed.

I'm not sure who Katherine's target audience is, but I know it's not me. If you like breathy prose ("..boyish good looks...") and inflight magazine profiles (23 career profiles in 200 pages), then you're going to have a rollicking good time. If you are looking for in depth discussions of various trading strategies by market luminaries then look elsewhere. What you get is a bunch of anecdotes relating, "How I became a hedge fund manager".

This book falls between two markets not delivering to either. If you are new to trading you are going to need a reference to interpret the jargon. If you have some experience you're going to think that the author doesn't know what hedging is (the trades described are the traditional searches for value based on fundamentals).

Hedging is an investment strategy that utilizes an understanding of risk and how it is priced into the current value of an instrument. A traditional fund manager is generally looking for value, that is, looks at the fundamentals of a business and tries to assess if the stock has been undervalued by the market, whereas a hedge fund manager is looking for value in pricing of a derivative instrument that factors in volatility, like a stock option contract, and takes positions on both long and short sides to make money. This is a rather abstract concept, so Katherine either doesn't understand this or couldn't be bothered to explain it to her readership.

Katherine seems to be a frustrated novelist and just didn't ask enough of the right questions to make this book worth the cover price. I would have rated the book higher, but for the fact that the book makes promises on the cover that it doesn't deliver. In a bargain bucket near you shortly (excuse the pun). A book you'll put down and only pick up to swat flies.

Better books on investment are Investments (6th Edition) and Options, Futures and Other Derivatives (6th Edition).

Although the author provides rare access to the thinking of 25 hedge fund great, she often misses the mark.

Hedge Fund managers are notorious for high returns and low profiles. Katherine Burton, who covers the hedge fund industry for Bloomberg News, provides the reader with access to these legends, but often fails to plumb the depths of their thinking.

The book is well-written. But I do not particularly care that the manager has boyish good-looks, is dressed in a suit or has holes in his blue jeans. From a book that carries this steep a price tag, I expect research methodologies, tips on mental preparation, trading tactics and logistics.

If you want to read breezy profiles, this book will suffice. If, however, you want to get under the covers, I would opt for [ASIN:0471794473 Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets]] by Steven Drobny.

I read this book carefully in its entirety, hoping for a contemporary analog to the classic Wizards trilogy so ably ushered into print by Jack Schwager (If you're interested in trading and haven't read these classics ~ even the weaker volume 3 ~ buy them now).

Perhaps having been influenced by the quality of Schwager's opus, I set the bar too high and became an easy mark for disappointment. I found myself grimacing again and again, and even saying to myself aloud, "Why didn't she ask the next, obvious question?"

Absent the probing questions that might have been asked of this glittering lineup of stellar performers, what we're left with is a series of personality profiles. The author's tepid prose skips like a stone across the placid surface of deep water. Untroubled by probing questions, the strategic and tactical aspects of hedge fund management remain undisturbed.

What we do read quite a bit of is descriptions of lobby and reception area decor found in the plush buildings where hedge fund operators spend much of their time. These breathless descriptions of decoration function as a trailing indicator showing that the author spent a lot of her time in waiting rooms rather than meeting with the subjects of her book.

It's valid to point out that the author isn't a markets practitioner but a markets journalist. Perhaps she felt that digging deeply would ruffle feathers of those she might wish to approach at another time as sources or for interviews? In any event, the resulting personality profiles wouldn't pass muster to appear in Bloomberg Magazine. The author is a Bloomberg reporter.

My wife purchased our copy of this book at one of the author's promotional appearances closely following publication. It was a professional forum, the room full of analysts and other practitioners. She commented that the author's replies to probing questions seeking elaboration were "uncertain, unsteady, and showed a lack of insight."

Go long Schwager's trilogy, between the covers of which you'll find a billion dollars worth of wisdom. Short this book by leaving it on the shelf.

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.

I thought Katherine Burton's book was pretty good - originally I was hesitant because the whole subject matter sounded so dry and highfalutin. However, I was pleasantly surprised that everything was educational, interesting and accessible.

There are ten pages or so devoted to each chosen individual and so over these 18 chapters we get spend time with one or two companies & see how they operate. In other words, what is their background (of the founders), their philosophy and so-on. Some of these funds managed by individuals (and their teams) have investments in the billions of dollars.

I was surprised to hear that not all of them hedged at all - some never even buy puts because they don't feel they need that kind of protection. Furthermore, many are into absolutely everything (stocks, commodities, debt instruments etc) although they do specialize in areas of expertise such as agriculture or energy. Some funds sell short, others won't touch that with a barge pole.

And none of them seem to be shy either. They not only discuss their triumphs but also their abject failures. They're also all pretty consistent regarding their rewards - in return for (say) a 1.5% management fee, a reached target of 10% or so return on the Fund earns them a whopping 20% incentive fee! Zoiks.

All-in-all, a very educational read. And because each chapter is so relatively short, it made for an easy read. It seems as though the author got to spend a lot of time with each subject and they were pretty candid with her. The only interview I didn't enjoy that much was Josh Friedman & Mitch Julis (ch 10) because it felt as though they were putting on a PR-exercise... but at no time did I get that from the other interviewees.

I think it helps if you have few basic ideas of finance but it is certainly not necessary to enjoy this book. The author is very good at dumbing-down some of the more complex subjects so as to make sense to us individuals.

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.

Hedge funds have made headlines in two ways over the past year with the second being a consequence of the first. Reported incomes and bonuses for hedge fund employees were substantial for the year 2006, which raised eyebrows and questions about the role of hedge funds in the American economy. The large numbers have served to interject hedge funds into the debate between the presidential candidates, which unfortunately tends to murk the issues regarding what hedge funds actually do.
This book will not help in de-murking those issues, as it contains no analysis of the role that hedge funds play in the modern economy. Rather, it is a series of brief biographies of some of the major funds and their managers. If you are interested in learning about these people, then you will find it a fascinating book. However, if your goal is to learn anything beyond their exterior and superficial investing strategies, which you could find in a fund prospectus, then you will be disappointed.
Interesting in the personal sense, yet dull and repetitive in the macroeconomic sense, this book is one where your response will depend almost totally on your interests. There is nothing about whether hedge funds serve a positive role in the modern economy or are just another tool for the wealthy to gain more wealth. If your interest is in the background and personalities of the major players in the hedge fund game, then I strongly recommend it.

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.

From reading the back cover of this book, you get the idea that what you hold in your hands may be a powerful source revealing the secrets of hedge fund investing. Well, your hope couldn't be further from the truth. What is the 'secret' of hedge funds? What do these mysterious people know that we don't know? How do they really decide on what to invest in? and How do I get a piece of the pie? You won't find out by reading this book. I was disappointed in the lack of revelations found within. But maybe my expectations were too high. Should I really expect these people to reveal whatever 'secrets' are making them rich? All in all, practically nothing is revealed in this book that isn't common knowledge already, or blatantly obvious to anyone even remotely connected to the investing world.

The book does, however, present very interesting and entertaining profiles of many top hedge fund managers. Each chapter reads something like an interview. Some managers reveal more about their personal strategies, some reveal less. Each, however, is described in detail as far as appearance and personalities. In this way, some of the mystique and secretiveness of the hedge fund business is overcome. By discovering that the people discussed in this book vary greatly in everything from beliefs to personal history, you at least gain the understanding that there isn't a certain type of person or membership in some mysterious organization required for getting into the field.

I'd only recommend this book to anyone interested in character profiles for the fund managers discussed within. You're not going to learn a lot about hedge fund investing, much less learn any secrets of the business.