Friday, May 5, 2017

Friday Feature Book Review: " Money Mavericks" by Lars Kroijer マネー・マーヴェリック―あるヘッジファンド・マネジャーの告白: ラース クロイヤー

This is just pure gold. This is an awesome true hedge fund diary. Without doubt, this is the most honest "true confession" of how to build a hedge fund, ever written. It is a warts and all explanation of the drive, hassle, envy, self doubt, family stress, vindication, satisfaction and acceptance in defeat, of a full roller coaster of emotions that any entrepreneur faces. The book reads as a step by step how to manual diary of all of the steps needed to set up a hedge fund from scratch in London. It would fit any hedge fund, but also any FinTech style startup so popular now as well.

It explains in extremely clear and professional detail, every aspect of a start to finish hedge fund creation. "If you can do it surely, anybody can" was the one quote that the author's friend said that I will never forget. Not the comment of a winner or a closer in my view, just a critic. That kind of friend would not be on my Christmas card list, ever again.

I only wish there was such a book in existence 15 years ago, when I first entered the industry, I could have saved a lot of time getting up to speed. Such is life and that where we are. At least we have this great "how to" hedge fund manual now. There may be a few differences in the setup procedures between a hedge fund in Europe vs the US, or even Asia, but they seem minor by comparison. With the amount of offshore legal structures out there, there are more similarities than differences. As someone similar who has built and maintained a business, there were many aspects explained and agonized about, that I could share business building experiences with. 

There was a time limited easy window when many with the right abilities at the right time, were lucky enough to succeed quickly. However, as we adapt to the next post Lehman crisis world of hedge funds, top tier returns have suffered so where is the next step forward? Redemptions and inflows have moved on to the larger names, not the new startups of late. Would Ken Griffin be able to start Citadel today? Would George Soros? My bigger question is what qualities will be needed to succeed in the coming wave of hedge funds in this post China peak, and Abenomics world of rising Federal Reserve interest rates? 

Risk appetite from investment banks must go somewhere, and this is a great insight into what any new aspiring hedge fund manager needs to review before winning in the next wave. This is extremely satisfying for the entrepreneur wanting to start a fund in the US, Europe or Asia. All of the lessons are spot on and so clear. I could not put it down due to the very candid, and openly revealed truth in every page. These are the author's insights that are often kept secret for too long shared with only a few trusted professionals.

The Top 3 Takeaways from this book that really impact any reader are:

1) There is a lot to learn about setting up a hedge fund. Legal details never seem to end. Service providers may seem complicated, but it comes down to a solid foundation at the start. Operational risk is a key part of hedge funds today. 

2) The integrity of hedge fund returns being higher than market average has been suspect recently, but gets more clear when explained by an expert. The grey zone seen by outsiders can be easily removed once you read this book.

3) The capital markets are always driven by many factors. Hedge funds serve a need and have a place. Investors seek out those returns, but these flows go in cycles. Right now large size firms seem to dominate. However, like any market, this could change, and fast.

There is no secret though, luck has to be behind you. If the market is able to get traction and is in "risk on" mode, you can succeed. If not, you just have to wait until the market window is ready, no matter how good you are or how high your personal alpha is. Market prices in London, where this is set, or anywhere else, can actually replace difficult thinking or debate about more difficult questions. The reality of markets leaves it mark on the global economy with any hedge fund set up in London or elsewhere. Highly recommended!

Please visit us for our Friday Feature Review where TMJ Partners will review books, movies, services and anything else with a financial theme.  Follow us now for our free weekly updates, just click hereThank you for reading and learning more about how money is made in finance!

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