Library / Biographies | Industries

Date of review: November 2019
Book author: Lars Kroijer
Вook published: 2012

Money Mavericks - Confessions of a Hedge Fund Manager by Lars Kroijer (2012)

The story of a founder of Holte Capital (with about $1bn of AUM at peak and about 7% net annual returns with low correlation to the market) is very useful for anyone looking for a career in hedge funds.
A highly entertaining book by a former hedge fund manager. The author is very honest and open about his thinking, doubt, weaknesses and generally about the hedge fund industry. One conclusion he makes is that generating superior returns in a hedge fund is extremely hard (almost impossible), especially after taking all fees and commissions into the account.

Kroijer has provided a good overview of the economics of a hedge fund with fees as a percent of AUM, various types of costs, including commissions to brokers and ultimately the profit that a manager can expect from managing a fund.

The book also has many interesting examples of various stocks and industries in which Holte Capital invested, which helps to better understand different investment cases. Unlike some textbook examples, cases discussed in the book come from real life, which also means lots of uncertainty at each moment. How a manager deals with this uncertainty and the outcomes his decisions lead to and ultimately what returns he generates is very helpful – all this I found quite helpful.

The only drawback I see is that the book considers stocks through typical hedge fund lenses -as quoted securities that can move a lot in 6-18 months. In no way do I want to blame the author for this (this is, in essence, the nature of a hedge fund business), but I just want to warn readers not to get too involved in this approach and always remember that stocks represent a share of a business and their performance reflects the changes in the underlying business in the end.

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