The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds

254 Pages·2012·2.32 MB·English

by  Maneet Ahuja

Contents

Foreword: The Less Mysterious World of Hedge Funds

Preface

Disclaimer

Chapter 1: The Global Macro Maven

The Makings of a Maven

Coming of Age through a Crisis

Building Bridgewater

Winning Over the World Bank

Belly Up: Learning from the Bad

Calculating Crises

Foreseeing the Financial Crisis

Extracting Alpha

Bringing Home the Alpha

Fund in Focus

Procuring the Principles

Watchful Eye on the World Today

Going After What You Want

Chapter 2: Man versus Machine

Tim Wong: The Engineer

Pierre Lagrange: The Money Maker

Chapter 3: The Risk Arbitrageur
The Making of a Risk Arbitrageur

It’s Not All Numbers

The Stuff of Legends

Knowing What You Don’t Know

“I’m Sort of an Independent Person”

The Greatest Trade Ever

Mispriced Risk: Dow/Rohm & Haas

Jumping into the Deep End: Citigroup

Good as Gold

A Little Help from His Friends

Fighting Back

Chapter 4: Distressed Debt’s Value Seekers

The Auto Bailout

Brother-and-Sister Partnership

Catching the Eye of Robert Bass

Killer Combination

Detecting Diamonds in the Rough

Extracting the Value

Chapter 5: The Fearless First Mover

Gearing Up at Goldman

Pulling in the Profits

“A” for Appaloosa

The Early Days

No “A’s” in High School

Learning and Earning

Fierce and Fearless
Titanic Track Record

International Intrigue

Russian Roulette

Bullish on Bankruptcies

Delphi Dilemma

WaMu Winner

The Force Behind Financials

The ABC’s: AIG, BAC, and C

Sizing Up the Sweet Spot

Chapter 6: The Activist Answer

Bright Beginnings

Getting Gotham Going

The School of Rock

Making a Name for Himself

Return on Invested Brain Damage

Buying the Farm

Rising from the Ashes

Fast Food, Building Record Results

Making Cents at McDonald’s

Borders and Target: A Couple of Clunkers

Zeroing in on Target

MBIA

A Dud

The Greatest Trade

A Penney for His Thoughts

Canadian Pacific on the Rails

What Makes an Activist
Chapter 7: The Poison Pen

The Young Whippersnapper Finds His Way

Catching the Big Wave in the Storm

Evolution and Revolution

The Third Point Tao and Team Approach

Chapter 8: The Cynical Sleuth

Cause for Cynicism

The Contrarian Investor

The Secret Sauce of Short-Selling

Defending an Investment Strategy

China’s Coming Crisis

Back to Business School Basics

Chapter 9: The Derivatives Pioneer

The Rise of a Trailblazer

“Lehman Weekend” at the Fed

The Technicalities of the Trade

Afterword

Appendix

References

Acknowledgments

About the Author
Index

Copyright © 2012 by Maneet Ahuja. All rights reserved.

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Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Ahuja, Maneet, 1984-

The alpha masters : unlocking the genius of the world’s top hedge funds /
Maneet Ahuja.

p. cm.

Includes index.

ISBN 978-1-118-06552-5 (cloth); ISBN 978-1-118-16759-5 (ebk); ISBN 978-1-
118-16758-8 (ebk); ISBN 978-1-118-16757-1 (ebk)

1. Hedge funds. 2. Investment advisors. I. Title.

HG4530.A389 2012

332.64’524—dc23

2012010363
To God — The Ultimate Alpha Master
Long ago, Sir Isaac Newton gave us three laws of motion, which were the
work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a
bundle in the South Sea Bubble, explaining later, ‘I can calculate the
movement of the stars, but not the madness of men.’ If he had not been
traumatized by this loss, Sir Isaac might well have gone on to discover the
Fourth Law of Motion: For investors as a whole, returns decrease as
motion increases.

—Warren Buffett