Hedge Hunters by Katherine Burton

Hedge Hunters

Hedge Hunters by Katherine Burton

Hedge Hunters by Katherine BurtonDuring my recent travels to London, I quickly finished this very enjoyable read of the hedge fund industry’s movers and shakers. Hedge Hunters: Hedge Fund Masters and the Rewards, the Risk and the Reckoning, which provides an overview of the hedge fund industry, gives an in-depth look at the behind the scenes of the world’s largest and most successful hedge funds, as of the summer of 2007. The book presents interviews with some of the leading portfolio managers from hedge funds over the last twenty-five or so years.

The book’s author, Katherine Burton, is a Bloomberg reporter and has followed the hedge fund industry for years. For this book, she gained unprecendeted access to the some of the most influential inner circles within the world’s powerful hedge fund industry, as well as the global financial sector at large.

Below is Publisher’s Weekly account of the book, which I thought was appropriate:

Like other books profiling hedge fund managers , this one promises unprecedented candor and a view behind tightly closed doors, but some of the 23 managers profiled gave similar interviews in books such as Market Wizards, The New Investment Superstars and Inside the House of Money, and some have written books of their own. Bloomberg News reporter Burton does break new ground by profiling 13 up-and-coming managers selected by 10 acknowledged leaders and legends. Compared with other authors, she is more interested in the personal and business qualities needed to build a successful asset management business than in pure trading ability. She concentrates on stock pickers rather than others, such as hedge fund managers who trade in nonequity markets. But the interviews tend to be soft: we learn about the managers’ boyish good looks, telephone ring tones, rapper friends and art collections, among other personal details. When conversations turn to trading, the managers usually supply anecdotes of successful trades, often with tension as the market initially moves against them. This is a pleasant and well-written book for readers interested in the people and business of hedge funds, rather than their investment techniques.

I agree that some of the material in Burton’s book is not new to some, but for those who have never read extensively about the hedge fund industry or followed this small, incestuous community closely, it is an invaluable introduction to this sub-world in the overall global financial community. While the hedge fund industry makes up a relatively small portion of the total financial sector in terms of size and money, this community has become finance’s own little conspiracy group, primarily due to the fact that the hedge fund sector and the people involved therein are highly secretive and typically opposed to discussing their professional activities, strategies and results.

Compared to the world of investment banking or private equity, one can barely get their hands around the volume of open access information that is available; however, the hedge fund community has remained fairly contained, almost acting like a small fraternity or even secret society of financial wizards that have considerable affects on the markets.

Overall, the book is a very easy read and it keeps the reader’s attention well as it gets to the point of the individual chapters, which follow a different portfolio manager or hedge fund, providing good background and insight from face-to-face interviews with the individuals.

While not exactly thought provoking and intellectually stimulating, this is an entertaining read that is also very informative and well-written and organized for those who have an interest in learning more about the hedge fund industry and the individuals who dominate it.

Ultimately, this book isn’t going to sway anyone’s views of hedge funds to the other side, not that the author is attempting to do that. If you have a detestation for hedge funds, based on whatever dislikes that might include, then the information in this book will only further your disdain. If you are enamored with the supposed prestige and glamour that is sometimes associated with hedge funds or if you have the desire to work for or run a hedge fund, then you will probably enjoy the book and take in the information. However, if you’re that interested in the discussion, much of the information will likely not be very new to you. Still, it is an easy and entertaining read, which most finance enthusiasts should enjoy, whether they like hedge fund managers and the hedge fund industry or not. I will also point out that since the nature of the interviews can get personal, the reader is able to see (in some cases) the softer sides of asset managers, perhaps demistifying their characters, as many have been lambasted by the media and industry insiders in the past.

On the negative side, I think Burton introduces some of the issues, operations and strategies related to hedge funds in a somewhat general manner, sometimes missing the mark completely. I realize that it is difficult to dive into in-depth, complicated hedge fund strategies in the amount of space of the book and still keep the reader’s attention, but I think there are some more macro-level issues related to the hedge fund industry that could have been addressed in the book, which I won’t bother going into here. Perhaps that wasn’t the point or maybe that’s for her next book, but it’s just my observation.

by guest blogger Mark Reiboldt

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