Working Style of a Hedge Fund

Based on my personal experience, a well-run hedge fund should

1. Good culture – each individual, no matter what titile you have, is a portfolio manager as well as an analyst.

     – Succeed up to capability, ingenuity and ambition

     – Work ethic

     – Weigh current income and long term wealth creation

     – Investing is an art, no a science; creativity stands out

     – Always rationalize risk/reward and probabilities

2. Know companies intimately 

     – Understand companies at higher level

     – Pinpoint in linkages and relationships in stock market, portfolio and company

     – Demand strong conviction

 3. Execution of details and coverages 

     – Know numbers and reporting dates

4. Trading

      – Reduce ill-conceived pruning

5. Data lead to opinion

     – State bottom line and detailed plan vs. rambling and jump ball discussions

     – Attack shorts with equal vigor, tenacity and accountability

6. Everything preferrably in writing

     – Quality and depth of work

     – Reduce worthless efforts

     – For insights to be convincing and firmly established, they need to be presented in words, symbols and charts.

7. Position sizing/hedging

     – Plan and size positions appropriately from start

     – With appropriate conviction, respect positions in portfolio

8. Maintain high spirit

     – Instill and pround in sense of accountability, urgency and action

     – Greater emphasis on contrarian action and discussion, nuture contrarian thoughts

      – Art to work closer on team and individual assignments

9. “Deer in headlights” – be alert


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