Diary of a Hedge Fund Manager: From the Top, to the Bottom, and Back Again

CHAPTER 9

WORLDS COLLIDE

After Magnetar acquired my team and drew us into their universe managing a portion of its long/short equity book as the Global Consumer Long/Short team, my life as a hedge fund manager took yet another turn. I was now spending sometimes one week out of the month in suburban Evanston, Illinois, living out of a hotel across the street from the Northwestern University campus. By this time Laura had moved in with me in Yorktown Heights, and we were planning to get married. She was used to my constant traveling, and we made it work.

Ross Laser ran the Magnetar business while Litowitz ran the book. Litowitz, a highly skilled merger arbitrage trader had been promoted from PM into the hybrid role of PM/Leader of Other Traders. He gave it his best, and was hands on in this regard, always asking questions of his PMs, getting us to defend our positions in terms he could understand.

Litowitz was in a way sort of the flip side to my first hedge fund teacher, Russell Herman. Herman looked into stocks and charts and fundamentals and balance sheet clues and wanted the beat of the Street, wanted to hear what management was saying; Litowitz looked at computer-driven models, numerical patterns. He taught me how to analyze the risk factors associated with stocks that were outside what I normally considered being retail risk factors. So while I understood how a highly publicized food poisoning incident could leave a restaurant chain’s share price heaving, what Litowitz showed ...