"Hedge Hunters" - Book Review

Hedge Hunters is a book by Katherine Burton that similar to Inside the House of Money covers the inner workings of the hedge fund business. The book offers readers a perspective into the hedge fund business through interviews with some of the more successful fund managers. Unlike Inside the House of Money, this book approaches the hedge fund industry from a slightly different angle by asking a series of questions:

• What makes a great hedge fund manager?
• What accounts for the ability to thrive under conditions that make mere survival an achievement?
  

To answer these questions Hedge Hunters reveals the thoughts of over 18 different portfolio managers through a series of interviews (most are relatively short 8 to 10 pages in length) and cover a standard background on the subject then a discussion of their approach to investing. The portfolio managers included in the book are:

• Mark Yusko - Blue Ridge Capital; Michael Steinhardt - Steinhardt Management Company
• John Armitage - Egerton Capital; Marc Lasry - Avenue Capital Group
• Craig Effron - Scoggin Capital Management; Lee Ainslie - Maverick Capital
• Bernay Box - Bonanza Capital; Boone Pickens - BP Capital;
• Brian Bradshaw, David Meaney, Michael Ross & Alex Szewczyk - BP Capital
• Josh Friedman & Mitch Julis - Canyon Partners
• Jeffrey Schachter & Burton Weinstein - Cedarview Capital Management; Dwight Anderson - Ospraie Fund
• Roberto Mignone - Bridger Management; Bruce Ritter - Yannix
• Julian Robertson - founder of Tiger Management; Jim Chanos - Kynikos Associates
• Richard Perry - Perry Capital; Daniel Loeb - Third Point.

The book covers a wide range of hedge funds and investment styles from macro global to distressed debt firm so there is enough range that everyone can find something for them in the book. I found myself warming to this book increasingly as I read further and found that the points out of the interviews seemed to be more clearly defined. I will admit the first part of the book reads more like a series of magazine interviews but as you get further in the momentum builds and the chapters flow together and build on the discussion (a large part of this has to do with the interrelationships of funds and managers detailed in the later half of the book).

Here are a few points that were made by different interviewees about the investing process that resonated with me:

• A great quote regarding contrarian investing from Bernay Box "I like to go to the party to see who's drunk" relating to the "hot" stock of the moment. In terms of problem stocks he states "... I like to go to fires to see what's coming out of the ashes".
• The interview with Jeffrey Schachter & Burton Weinstein takes an interesting turn as it focuses on the improvements their firm has made to their investment process to address challenges they'd faced. The interview details their use of tools for trading such as aggressive use of Stop-Loss orders on their positions, a strong IT infrastructure to track and ensure they focused on the best ideas from their team.
• Julian Robertson offers some interesting criteria he looks for in bringing on new talent into his firm which include: honest, smart, hard-working and competitive people. Mr. Robertson's provides good insight into part of the process of developing a great hedge fund manager since he has been instrumental in training and helping launch the careers of a long-list of successful managers. I think the interview with Mr. Robertson while different in tone to others in the book is one of the more interesting given that so little time and attention is paid to developing great talent in the investment management business.
  

Bottomline - Whether you're interested in becoming a professional investor or simply better managing your money Hedge Hunters offers some valuable insights into the techniques, mind-set and skills needed to be a successful hedge fund manager.

Fair Disclosure - I was sent a review copy by Bloomberg the publisher of this book to read and was skeptical but as stated in the above review found it a worthy read especially for those interested in hedge funds or professional investing.