Confessions of a Hedge Fund Manager

The real deal

Spending money and being happy

With the Smith investment, we had passed our cashflow break-even assets

under management to become a profitable business. We charged our man-

agement fee every month so the impact was immediate and we would now

receive a further $30,000 per month in fees alone. Since nothing had really

changed in our little firm and we had incurred no extra costs, this money

went straight to the bottom line. At last we were able to have an internal

meeting to decide how to spend our new-found wealth. ‘Salaries would be

a welcome change!’ suggested Brian. It was hard to disagree.

In the months that followed, we saw for the first time the positive side

of having significant momentum. We received an average of $10 million a

month in new assets under management both from our new large investor,

but also from investors who were now comfortable that there was little risk

in investing with Holte. The floodgates had not quite opened, but being

less desperate for money clearly made us a more attractive prospect. What a

new and nice change it was to sit in meetings with potential investors who

were looking for reasons to invest, rather than for reasons to stay away.

Without keeping track we felt that a meeting in our office had gone from

being 2 per cent likely to generate a new investor to more like 10–15 per

cent. And that made me more excited about taking meetings. Rather than

the dull faces of people trying to fill their schedules that pervaded earlier

meetings, the potential investors were now engaged and interested, sug-

gesting that they were actually seriously considering an investment.

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