Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets, Revised and Updated

Chapter 8

The Dot-Commer

Peter Thiel

Former CEO and Cofounder of PayPal Clarium Capital San Francisco

Peter Thiel is bit of an enigma in global macro. Whereas some managers earn distinction because they are successful and secretive, Thiel is unusually open about all things related to his business, Clarium Capital Management, a San Francisco–based global macro hedge fund. Since its launch in October 2002, initial investors have more than tripled their money and fund assets are now well over $1 billion. Clarium was the standout performer in global macro in 2003 and again in 2005, with net returns over 50 percent both years.

Thiel is very different from most other global macro managers in other ways as well. Rather than having spent his entire career within an investment bank or hedge fund before moving on to launch his own fund, Thiel founded PayPal, a dot-com company, in 1998, in the middle of the biggest financial bubble of recent memory; listed on the NASDAQ well after the bubble burst in February 2002 with a $1 billion market capitalization; and then sold the company to eBay six months later for $1.5 billion. When asked, Thiel credits his global macro vision with his success as a former technology entrepreneur. As a result, many of his major trading themes since starting Clarium have centered on the lingering impacts of the bursting of the bubble. He has been right on most of these themes, such as long bonds, short the U.S. dollar, and long energy, leaving only his short equities ...