Introduction
This is the story of the life of a hedge fund. I started Holte Capital in 2002
and returned all the external capital to the remaining investors in February
2008. Those six years tested my sanity and resilience to their limits. In
this book, I want to explain what it was like to run a hedge fund during a
period where the industry went from relative obscurity to something every-
one’s uncle would discuss.
When I set out to write this book it was mainly because I felt the
inner workings of the hedge funds were poorly understood by outsiders.
Having grown from a small and mainly US investment activity to become
a global trillion-dollar circus, the industry is often unfairly portrayed as a
fee-charging gambling den populated by dart-throwing chancers and Bernie
Madoff’s evil twin. This was nothing like the industry I had been a part of
for a decade and I recognised little of my time at Holte Capital in many
of the accounts. The industry I had known largely involved highly intelli-
gent people who were passionate about the world of investing. They would
spend endless hours engaging in complex financial analysis to find angles
from which their investors might profit. If they failed, the repercussions
would be swift and severe. If they succeeded, the rewards would be massive
by any normal standard probably too big. It was certainly exciting, but
not in the way most people seemed to think.
The term ‘hedge fund’ is often thrown around as if we all know what it
is, or are meant to know. To me, hedge funds constitute investment funds
that invest in a very broad array of assets classes, often across multiple geog-
raphies, and with very different risk profiles. Sometimes hedge funds are
extremely narrow in their strategy while many engage in multiple strategies
within the same fund. Like a mutual fund, the hedge fund manager charges
an annual management fee, but in addition charges a performance fee on
profits. The performance fee is typically where the really big bucks are
made. The investors in hedge funds may be wealthy individuals, but more

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