The Alpha Masters: Review of Maneet Ahuja's Book on Dalio, Paulson, Tepper, Loeb & More ~ market folly

Monday, May 21, 2012

The Alpha Masters: Review of Maneet Ahuja's Book on Dalio, Paulson, Tepper, Loeb & More

We've just finished a must-read book on some of the top hedge fund managers in the game. The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja takes you behind the scenes with exclusive interviews and profiles of the managers you read about on this site each day.

Ahuja is CNBC's hedge fund specialist and co-creator of the Delivering Alpha summit. Through her roles, she's developed quite the rolodex and has put it to work by giving readers unprecedented access to prominent managers. With a foreword by PIMCO's Mohamed El-Erian and an afterword by Myron Scholes, Ahuja's book profiles the following nine managers:

Chapter 1: The Global Macro Maven - Ray Dalio, Bridgewater Associates
Chapter 2: MAN versus Machine - Pierre LaGrange & Tim Won, MAN Group/AHL
Chapter 3: The Risk Arbitrageur - John Paulson, Paulson & Co
Chapter 4: Distressed Debt's Value Seekers - Marc Lasry & Sonia Gardner, Avenue Capital
Chapter 5: The Fearless First Mover - David Tepper, Appaloosa Management
Chapter 6: The Activist Answer - Bill Ackman, Pershing Square Capital
Chapter 7: The Poison Pen - Dan Loeb, Third Point
Chapter 8: The Cynical Sleuth - Jim Chanos, Kynikos Associates
Chapter 9: The Derivatives Pioneer - Boaz Weinstein, Saba Capital Management

The book's cover photo is the perfect depiction of what many perceive the hedge fund industry to be: money and secrecy hidden behind locked doors (or in this case, a bank safe deposit box). But just as the cover suggests, Ahuja has unlocked the door to the industry's top titans and she lets you in on some of their secrets and little known facts.

How David Tepper Named His Hedge Fund

One such tidbit is found in Chapter 5 about David Tepper.  While Market Folly often details Tepper's portfolio activity, The Alpha Masters sheds light on little known facts such as why he selected the name 'Appaloosa Management' for his firm to begin with.

It's always interesting to learn what hedge funds are named after because they often tell a story or reveal information about the managers themselves. In Tepper's case, it simply highlighted his desire to make money.

Ahuja writes,

"Tepper and Walton only needed the perfect name for their new venture. Greek mythology was popular at the time and they first decided on Pegasus, the flying horse, before discovering it was already taken. So Walton went to the library and came back with a book on horses. They knew they needed a name that started with 'A' to be first to receive faxes on trades, which was how orders were processed back then. They had learned well from their stints at Goldman that two minutes could make or break you. The first name they came across was 'Achaikos' but they found it too hard to pronounce. So they skipped ahead and settled on 'Appaloosa.' And the fund was born."

Why The Alpha Masters is a Must-Read

This book is a compilation of stories and fascinating facts about nine top managers. We've been tracking these prominent hedge funds for years, but The Alpha Masters kept peeling back layers of intricate details.

At first glance, some of the historical background on the managers' lives may seem tedious and boring. But then you realize that Ahuja has included these anecdotes because it paints a picture as to who the manager was and what they've become.

These stories told in the manager's own words make you feel as if you're simply at lunch with a friend reminiscing about their past. But Ahuha has masterfully taken that friend and replaced them with a hedge fund titan removed from Wall Street's trillion dollar pedestal. And when you've finished reading, these seemingly untouchable god-like moneymaking machines have morphed into mere mortals just like you.

After all, like many entrepreneurs and small business owners today, these hedge fund icons at one point in their lives took a big risk, pursued their dreams, and started their own firms.  Ahuja chronicles the entire journey (even before the fund's inception) and the real value is seeing what each manager had to go through to get where they are now.  As these dream chasers soared to amazing altitude, they now tell their success stories as luminaries sure to inspire the ascension of the next master money managers.

But apart from the human element, this book does exactly what its title implies: it's unlocked the genius of the world's top hedge funds by giving you tons of access to people you'd probably never meet as well as stories and wisdom you'd probably never hear otherwise.

The most valuable aspect of this book is that it gives you a front row seat in a classroom full of hedge fund icons detailing their investment thought process, what mistakes they've learned from, how they've developed as investors, and what it takes to succeed.  While many perceive hedge funds to be secretive, Ahuja has acquired astute anecdotes from top managers and purveyed them for all investors to learn from.  And, unbeknownst to us, it was a pleasant surprise to find listed as a reference at the end of the book.

Definitely check out The Alpha Masters (hardcover) or Kindle e-book version here.

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