Confessions of a Hedge Fund Manager

Friends and competition

Old-man talk and gossip

In 2006 at the age of 34 I had been in hedge funds for almost a decade and

run my own firm for half that time. I was still too young to be a veteran,

but because of all the new arrivals from the industry’s explosive growth I

felt like an old-timer. I found myself making ‘old-man comments’ like ‘back

in 1999 the merger arbitrage spreads were so wide you could drive a truck

through them’ (i.e., the spread between the eventual consideration received

in a merger or takeover and the current price of a stock was very large), and

generally made remarks to the effect that all these new people coming into

the industry didn’t know what they were talking about. Excluding of course

the possibility that we didn’t either! If I had not gone to Harvard Business

School or been relatively young myself I would surely have been making

those idiotic generalised comments like, ‘People from Harvard don’t know

the first thing about the real world’ or ‘Young managers don’t have the

experience to succeed and are there for the taking’.

Over my years roaming the London hedge-fund landscape I made a

number of close friends whom I would meet at lunches or conferences. I

generally stayed away from the ‘idea dinners’ or similar things where several

funds would collaborate since I felt they were bound to encourage every-

one to converge on the same trades. On one occasion, however, I organised

a dinner for 8–10 hedge-fund managers in central London. Although it

included investors managing double-digit billions of dollars, it was a casual

and relaxed affair. Rather than discuss trade ideas, we shared anecdotes

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