Diary of a Hedge Fund Manager: From the Top, to the Bottom, and Back Again

227 Pages·2010·2.73 MB·English

by  Keith McCullough

$29.95 USA / $35.95 CAN
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KEITH MCCULLOUGH is the founder of Research e Ug
h iary of a Hedge Fund Manager is an insider’s
Edge, a provider of independent securities markets
view of the high-stakes money management
research that has become the go-to source for analysis
world. In a distinctly straightforward and, at
and trade recommendations among savvy money
“An engaging and fascinating memoir of a Wall Street insider who foresaw the crisis and lost his job
times, humorous style, Keith McCullough
managers. He is also a Bloomberg TV Contributing for it. McCullough has written an insightful fi rsthand account of our modern Rome before—and
and Rich Blake take you on the journey of a young
Editor. McCullough started in the business in 1999 after—its fall. The author stands head and shoulders above his peers with his phenomenal trading
and successful hedge fund manager and former
as an equity analyst at Credit Suisse First Boston. track record, personal integrity, and skill at communicating his unique experiences.”
— Richard L. Peterson, junior hockey player from Thunder Bay, Ontario,
From there, he ran assets for Dawson-Herman MD, Managing Director, MarketPsy Capital LLC; author,
as he gets recruited to the Ivy League, stumbles onto
Inside the Investor's Brain
Capital Management’s Millennium Fund, and then
the nexus of the hedge fund universe, and then gets
launched his own fund, Falcon Henge Partners
“If an unholy offspring of Lester Bangs and Don Cherry traded and wrote a fi nancial market diary, a crack at running his own pile—becoming one of
LLC, which was integrated in to Magnetar Capital.
it might be something like the smart, hip, and crunching commentary hedge fund manager Keith the best young portfolio managers on the Street.
He then moved on to become a portfolio manager
McCullough delivers every day. Keith is on a short list of must-reads in a business fi lled with also-rans.”
at Carlyle–Blue Wave until 2007. McCullough is a — Dr. Paul Kedrosky,
Editor, Infectious Greed; Managing Director, IG Holdings; Senior Fellow, But when the young portfolio manager fi nds
graduate of Yale University and also former captain Kauffman Foundation
himself working for one of the world’s most
of the Yale hockey team.
prestigious fi rms—helping to run their hedge fund
“Diary of a Hedge Fund Manager should be added to the list of must-read books on Wall Street. It
RICH BLAKE operation just as the market is starting to crack
was the cofounder and executive is very rare that readers get this kind of insight into the world of what Wall Street calls the “smart
in 2007—McCullough becomes a lonely voice
money”. McCullough’s exciting and inspirational story reinforces the fact that hard work pays off.
editor of Trader Monthly magazine. He frequently
The book does a great job of pointing out that, on Wall Street, common sense and hard work trump of reason in a world that rewards groupthink and
contributes to CNBC’s Power Lunch and to Alpha
a PhD—without actually saying it. His honesty is refreshing and reminds us all that the giants of disregards the adage about past performance having
and Portfolio magazines. Prior to the launch of
the hedge fund world are mere mortals. This story is one that both Wall Street and Main Street can no bearing on future results. When McCullough
Trader Monthly, Blake wrote for Institutional Inves-
relate to and learn from.”
fi nds himself shown the door, the story takes a
tor. He is the author of two books, The Day Donny — Douglas M. Famigletti,
CFA, Managing Director, Griffi n Asset Management, Inc. fascinating turn into the world of independent
Herbert Woke Up and Talking Proud: Rediscovering
research and no-holds-barred criticism.
the Magical Season of the 1980 Buffalo Bills. “Like Liar’s Poker and Fiasco before it, Diary of a Hedge Fund Manager offers a fascinating, funny, and
frightening account of life on the Street. An indispensable account of how the fi nancial-industrial
Page by page, this fast-paced ride through the world
complex destroyed so much of the ‘value’ it purported to create.”
of hedge funds reveals the unvarnished truth of
—Dan Burrows,
Senior Writer, DailyFinance
how Wall Street and hedge funds really operate and
offers real-world investment lessons you can take
“The hedge fund world is notoriously secretive. But in Diary of a Hedge Fund Manager, Keith
away and put to good use.
McCullough reveals what's behind the curtain to show an industry that frequently is little more than
a lot of smoke and mirrors, much the same way that Toto revealed the Great and Mighty Wizard of
Oz to be nothing more than an ordinary man.” Written with the authority of someone who knows
JACKET DESIGN: MICHAEL J. FREELAND —Michelle Leder, founder and Editor, footnoted.org; author, Financial Fine Print KeitH McCu lLoUgh how Wall Street and hedge funds work, yet accessible
to even a casual follower of fi nance, Diary of a Hedge
WITH RiCH BLAKE Finuvnedst mMeannta ignerd umstirxye sw ai tcho nfustnrduacmtiveen tcarli tlieqsusoen os f ththaet
any investor will fi nd valuable.
OVERALL MATTE FINISH
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Diary of a Hedge
Fund Manager
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Diary of a Hedge
Fund Manager
From the Top, to the Bottom,
and Back Again
K M C
EITH C ULLOUGH

WITH
R B
ICH LAKE
John Wiley & Sons, Inc.
iii
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Copyright © 2010 by Keith McCullough and Rich Blake. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their
best efforts in preparing this book, they make no representations or warranties with respect
to the accuracy or completeness of the contents of this book and specifi cally disclaim any
implied warranties of merchantability or fi tness for a particular purpose. No warranty may
be created or extended by sales representatives or written sales materials. The advice and
strategies contained herein may not be suitable for your situation. You should consult with a
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Library of Congress Cataloging-in-Publication Data:
McCullough, Keith, 1975–
Diary of a hedge fund manager : from the top, to the bottom, and back again / Keith
McCullough with Rich Blake.
p. cm.
Includes index.
ISBN 978-0-470-52972-0 (cloth)
1. Hedge funds. 2. Investment advisors. I. Blake, Rich, 1968– II. Title.
HG4530.M39 2010
332.64(cid:1)524–dc22
2009035907
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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For Jack
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Contents
Introduction 1
Chapter 1: Catch a Wave 9
Chapter 2: Shipping Out 17
Chapter 3: Welcome to the Jungle 29
Chapter 4: Snapshots from the Dot.Com Bubble 39
Chapter 5: Discovery 61
Chapter 6: Flying with the Giants 79
Chapter 7: Shifting for Myself 97
Chapter 8: Sucked In 115
Chapter 9: Worlds Collide 123
Chapter 10: Exile on Wall Street 139
Chapter 11: Lifting the Curtain 157
Chapter 12: The Great Squeeze 185
Epilogue 197
Acknowledgments 205
About the Authors 207
Index 209
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