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 MarketFolly.com listed as a reference at the end of the book.
Definitely check out The Alpha Masters (hardcover) or Kindle e-book version here.
Monday, May 21, 2012
The Alpha Masters: Review of Maneet Ahuja's Book on Dalio, Paulson, Tepper, Loeb & More
Wednesday, February 3, 2010
Hedge Fund Panel: Case For Global Equities In 2010 (Ainslie, Mignone, Robbins, & More)
We're continuing coverage of the recent hedge fund panels that took place at the Morgan Stanley Breakers Conference on January 25th & 26th, 2010. Earlier today, there was an introductory post that outlined key takeaways from the event. Next, let's look at the separate hedge fund manager panels and start with the long/short equity hedge fund panel featuring Bridger Management's Roberto Mignone, Carlson Capital's Clint Carlson, Glenview Capital's Larry Robbins, GLG Partners' Pierre Lagrange, and Maverick Capital's Lee Ainslie.
The Case for Global Equities in 2010: What Should Investors Expect?
- Lee Ainslie (Maverick Capital): Ainslie focused on how in 2008 and 2009, there was little differentiation between stocks as 90% of them were down in 2008 and 90% of them were up big in 2009. He notes that risk premiums are now back up to 2007 levels and that fundamentals aren't really responsible for the massive price gains and that needs to change. His best idea going forward is large cap technology companies.
This sentiment falls directly in-line with when we looked at Maverick's portfolio and saw they were betting big on technology stocks. Ainslie's hedge fund is one of the many funds that comprises the Tiger Cub Portfolio created with Alphaclone where you can replicate the positions and enjoy 15.5% annualized returns since 2000. To learn more about Maverick, check out our profile/biography on Lee Ainslie & Maverick.
- Roberto Mignone (Bridger Management): Mignone's best stock idea for 2010 was healthcare across the board as he says there is a huge margin of safety. He said you don't even need individual names, just an ETF. We of course will examine his holdings when the new 13F's are released soon in order to single out some names. Mignone also noted that there are a ton of mega cap multinational companies trading at low valuations. Many of them have massive cash flows and offer an attractive risk adjusted return. This is not the first hedge fund manager we've seen talk about this. Bill Ackman recently started a large Kraft (KFT) position and is one of the many examples.
Bridger Management now runs $2.4 billion and is closed to new investors, except for replacing redemptions. They don't want to increase their size as it then becomes nearly impossible to have the necessary short portfolio. Not to mention, Mignone likes to focus on investing rather than running a big organization. They have nine analysts (including Mignone) and have always had a large focus on healthcare. We recently covered Bridger's new position and previously looked at their portfolio as well.
Mignone is known for his sleuthing skills in identifying short positions. However, this worked against him in 2009 due to the massive rally. At the same time, he noted that shorting has changed due to an increase in news flow and transparency, and a shrinkage in the pool of capital to short.
- Larry Robbins (Glenview Capital): Like Mignone & Bridger, Robbins' Glenview has large healthcare exposure. His best idea was Express Scripts (ESRX). He notes that contrary to popular belief, this company won't be affected by healthcare reform. He thinks that ESRX will benefit from generic conversion and thinks they will see 30% earnings growth. With earnings of $7.10 to $7.25 in 2011 the company trades at 12x 2011 estimates and 16x 2010 estimates. He notes this company has a bright future with solid growth and high visibility. For other hedge funds that own this name, we saw that David Stemerman's Conatus Capital had a sizable ESRX position when we looked at their portfolio.
Robbins also thinks that 2010 will be akin to 2004 where stockpicking will return so managers can generate alpha rather than relying on beta like they did in 2009. We haven't covered Glenview much in the past and we did note that back in 2008 they were amongst the top 10 asset losers, but they have since bounced back.
- Clint Carlson (Carlson Capital): Carlson believes that the expectations of an interest rate increase will hang over the markets in 2010. He feels that event-driven strategies in the hedge fund arena will be very successful as M&A will pick up and he thinks the potential for takeovers is not priced into many stocks. We haven't covered Carlson before on the site and note that they run a series of hedge funds in Dallas, TX with over 130 employees focusing on relative value arbitrage, risk arbitrage, credit, and long/short equity.
- Pierre Lagrange (GLG Partners): Lagrange's best idea was essentially London pub companies. He notes these are crowded shorts and yet these companies have stable cash flow and are an enterprise value play. Punch Taverns (LON: PUB) fits the bill here and this is interesting as saw David Einhorn's Greenlight Capital selling shares of Punch Taverns back in November.
That wraps up coverage of the case for global equities panel. Head to the overview of the hedge fund panel and check back tomorrow for summaries of the credit panel, the 2010 investment landscape panel, and more.
