A Day In The Life

Hedge funds are an emotional experience

Originally published in the October 2010 issue

The following represents my experience of a typical day as a hedge fund manager.

Wake up. I am using my mobile as alarm clock and since it is in the charger 10 feet away, the snooze button is out of reach. Swiped alarm clock off the night table a while back and broke it. Those who say you get used to the early mornings are filthy liars.

Leave home for a brisk walk from Notting Hill to Mayfair through the park. Often hope for rain so that in good conscience I can take an eight-minute £7 taxi ride to South Molton Street coffee shop for my espresso fix instead of walking, before heading to office.

Arrive at Holte Capital. Turn on my three computer screens and the world of finance springs into life. All the news sources are set up on my screens so I know within seconds what’s happening in the world and in the markets. Our stocks have tickers entered so flashes will appear if there is any news on them. Within a few minutes I will have an idea of what is going on including checking subject lines of emails from brokers. Nothing. So could have stayed in bed longer. Good joke from friend with link to YouTube which I check out when nobody sees me doing it.

Contact our trader to send orders that we want to work today in case they reach the prices we are looking for. Settle down to read a large industry report on oil rigs that I have been looking forward to.

Another phone call from broker to go over daily news, which I know already. I don’t need this, and tell him so.

Opening auctions for most European markets.

Trader tells me one of our stocks is acting funny. Up a lot on heavy volume. Both she and I start calling around to hear what is going on.

Excellent. Up $1.2 million. Nice – at that rate I will be Bill Gates by the afternoon even if the profit is less than 0.5 per cent of our current AUM.

Company that was up a lot denies local radio rumours that they will be taken over; they want to stay independent. Stock in freefall and I am pissed off that I missed an opportunity to sell some shares.

Down $500K on the day now. Nothing good lasts forever – or in this case, more than 20 minutes. I try to go back to reading rig report in slight annoyed state, but phone keeps ringing with people trying to tell us that rumours of takeover are not true. Make a call to my contact at the company to hear if their tone has changed over being open for a takeover, but end up leaving a voicemail. He always told me that some of the other senior people seemed keen to cash out and I want to know if that has changed.

Potential recruit John is here on time. We are trying to hire an analyst and this one has a decent résumé. I like him, especially his story about climbing Mount McKinley in Alaska, something I always wanted to do. Ask why he left his previous hedge fund and John tells me that although his performance was excellent, he quit because he and the portfolio manager wanted to focus on different things. Why does nobody ever admit to losing money or getting fired? I don’t catch him out on the bullshit story because he has some interesting trades he is talking about. Besides, I know John’s former boss and can get the real story if we move down the road with him. Doriana knocks on the glass walls of the conference room to gesture that I should take a call. I bid John goodbye and call in Alberto. Alberto is our pit bull who loves digging into the analytical skills of recruits. I get to play the nice guy and have Alberto find out if they can add and subtract or know how to do a cash flow analysis.

Was I in there for over an hour? Must get more focused. I start going through the 15 emails that made it through the filter since I went into meeting and print out three reports to read later. Our trader Sarah asks if I want to change the limit on one of our trades since it is so close but we are getting nothing done. I tell her to use her best judgement. Also return call to our lawyer. He wanted to tell me about the latest tax planning scheme. I hear too many of those and thankfully have Brian to sort through them.

We are just about flat for the day so every couple of seconds P&L is blinking with a small black number to say we are up, then with red numbers to say we are losing money. Black – red – red – black – black. It can become hypnotic. I turn off the automatic update function on my computer and now it will only recalculate the P&L when I hit F9. I still hit F9 much too often. Only on page seven of the rig report which is 42 pages long, but now I am making progress.

Leave for noon lunch in the City with company management for Dutch IT provider. I am heading there with Andy, a friend who works at a large US fund in Mayfair. We chat about trades in the taxi and discuss the crazy housing bubble in London. Something is going to have to give and I would not want to own a mortgage bank when it does. Lunch is near the top floor of Tower 42, one of the tallest buildings in London. It has a beautiful view south across the River Thames and all the way to green hills where the world of finance does not dominate every second of the day. I recognise a couple of faces and we nod acknowledgement. The CEO basically reads from the presentation and some of the guests have a hard time staying awake, including me. I should have had them come to our offices, but I sometimes like going to the group lunches so I can hear the questions from other managers and see how management presents.

Back in the office. P&L now up $500K which is better, but does not rock my world.

Call Puk to tell her that I will not be home for dinner. She told me I had promised to have dinner with her and her mum who is visiting town. I say sorry and promise to make it up. ‘You always say that,’ she says.

Resume my rig report, but Oliver wants to talk about a new banking trade. If you eliminate the listed US and Polish units from Bank of Ireland, the remaining Irish domestic businesses trade much higher than their local competitors despite a very similar business profile. We could short Bank of Ireland, go long the two subsidiaries and the cheaper Irish competitors to lock in the spread. Sounds interesting, but Oliver has been on a bad run of losing trades and I need to look at this more closely before committing. ‘But it is at such good levels now,’ he says, still standing by my desk. I stall him again, then wonder whether I should go through Oliver’s analysis before finishing my rig report. I don’t want him to think I’m ignoring him.


I have a headache and try to kill it with my fifth coffee of the day. I can’t focus on my report and keep getting my semi-submersible oil rigs confused so I take a ten minute Internet ‘break’ and check out CNN and an interesting article in NY Times magazine. Bloomberg is great for that. Even if you are reading a Bloomberg article on football, the screen setup looks exactly the same as if you were reading work stuff and nobody can tell you are not working.

Analyst for one of our bigger investors calls for a quick update. Just wants to know what made and lost money last month so he can put it in his internal report. I worry slightly when he tells me that a lot of other funds did similarly to us last month. ‘We don’t want to correlate,’ I think. He tells us again that they would be keen for us to take more risk.

Zach, another of our analysts, tells me he is ‘200% certain’ that a German company will dividend out their large cash holding and that the resulting entity will be bought by Deutsche Telecom and that we should act now. A couple of days ago he was only 110% sure of something that did not happen, so 200% is clearly better. I once told him that I considered something 90–95% likely and he clearly understood that to mean a 50/50 chance. I enjoy making fun of each other over the way we express things, but get annoyed when it leads to misunderstandings in real probability calculations.

Closing auctions start. Quiet day, but we ended with a small $250K profit. Not quite a rounding error but close. There won’t be many trades for Doriana to book into the system, which is just as well as we have a cake surprise ready for her birthday. I doubt it will be a real surprise as she is normally the one to get the cake when it is somebody else’s birthday. Means I will have to skip my closing bell Starbucks run.

Sit down with one of the guys to discuss insurance trade. We have kept track of the portfolio of a UK insurance company and notice that the value of their investment portfolio has fallen far more than the value of the company. We study in detail the duration of their bond portfolio as we think there is a mismatch with the company’s longer-term insurance liabilities. We also note that they are involved with all sorts of default swaps that they have no business being involved in – typically a bad sign. We agree that there is a trade here at some point.

Brian asks me to sit in on a call with Morgan. Someone there says he has a philosophical issue with reducing a certain fee even if it is easy in practical terms. I tell him that I doubt Credit Suisse has philosophical or other issues with it and he reluctantly concedes the point. Probably a good thing we now have two competing prime brokers, even if it means our relationship will be less close.

Leaving the office to have drinks with a friend before dinner with a broker. I managed to read 32 pages of my rig report, which is better than some days. My friend is thinking about starting a hedge fund and tells me how he plans to raise $50 million through friends and family and then build a track record before going to $400 million and up from there. I am irritated by the implication that, ‘If you could do it then surely anyone can.’ If I had a dollar for every time someone has told me that exact plan…

I go back to the office to pick up the other guys and we go to dinner at a nice French restaurant with a Swiss broker who turns up 10 minutes after us. Why do these dinners always have to start at 8pm when most of us finish our work day at 6.30 or 7pm and are keen to get home on the early side? It’s almost as if the broker does not think we can have a good time unless we leave the restaurant around 11pm having drunk too much. Really nice guy though – knows how to keep conversation flowing easily. Brought along a couple of younger guys who are clearly being trained in client entertainment. Main guy talks about a couple of trades, but those we are interested in we already know much better than the 30-second spin he gives us, and the rest are not really what we are looking for. Worth a try though.

Home in bed. Fall asleep before I hit the pillow.

The above account represents a hypothetical composite day, drawn from real experiences. While it gives, I believe, a realistic flavour of the daily Holte Capital routine, it fails to convey that one of the great things about running a hedge fund was enjoying the diversity of challenges that each day brought. And it only hints at the higher personal costs. When my wife Puk gave birth to our twin girls, Anna and Sofia, in December 2004, I was back at my desk within 48 hours and for the first three years of their lives I rarely saw them between the time we tucked them in on Sunday night and the moment we woke them the following Saturday morning. I left the house before they got up, and returned in the evening after they had gone to bed. Some Saturday mornings in the early days, my daughters would give me the puzzled look they would normally reserve for strangers, whereas friends of mine would proudly describe how close they were to their kids. Running a hedge fund was obviously a 24/7 proposition, but I was also guilty of being unable to disconnect. When we took our rare holidays I would constantly be on the computer to deal with some real or perceived crisis at the office. I would frequently find excuses to call in to hear what the daily P&L looked like. Eventually I decided that the best way to save me from myself was to go west for family holidays. In the Caribbean, the London trading day would be half done by the time we got out of bed in the morning and despite my best efforts to ruin my own holiday there were only so many hours left in the day to do so before the markets closed for the day. By contrast, if we were in Egypt or Dubai, Puk would comment on how I seemed absent-minded as we sat down to dinner – while I was thinking about the closing market auctions that would be going on right then.

Although the stress of running a hedge fund was unusually high during the week, the working hours were no longer than those of my peers from business school and I would rarely work weekends. Comparing this with my investment banker or consulting friends, the whole thing was really a bit of a breeze…right!

Despite the predictable sacrifices, I loved the freedom my job offered, and considered myself incredibly lucky. I did what I found interesting instead of being a cog in a corporate wheel where my time would effectively be allocated by others. I remember often laughing to myself at the stark contrast between my time at Holte Capital and my early days as an analyst in the dungeons of Lazard Frères when my typical day would go something like this:

Turn up in your sharpest suit ready to be one of this generation’s masters of the universe. You hope nobody notices you are wearing the suit for the fifth day running.

If busy or caught not looking busy:

9am–11pm or later
Get screamed at by sadist superiors often out for revenge for the torture they endured while they were in your lowly position a couple of years ago. Make small formatting adjustments in the endless spreadsheets you produce at their pleasure. If I never see another 50-page Excel model with thousands of numbers in varying colours and shades again it will be too soon. Pressure slows when your immediate boss checks out around 10pm, his boss having checked out at 9.30pm, leaving you to complete ‘something we need for tomorrow’.

One night around midnight after about eight months at Lazard I was frantically trying to complete a spreadsheet. I knew the partner on the deal was waiting impatiently in his office. Twice already my phone had rung with the phone display screaming: ‘BRAD EVANS’. What it should really have said was ‘BRAD EVANS. ANGRY PARTNER. EATS BABIES FOR FUN’. He was not happy being kept in the office by a young analyst when he should have had an associate and vice-president buffering his exposure to my youth and inexperience. I finished the last part of the analysis, did a quick double-check and ran downstairs to present my work with the printout still warm in my hand. Brad took the analysis from me without uttering a word. He seemed content as he went over the numbers. Suddenly his demeanour changed to a dour expression and he pulled out his calculator. ‘Oh no,’ I thought, knowing what would come next. He circled a number with a fat blue pen and in pre-rage mode said between gritted teeth: ‘This number is wrong. You’ll need to do it again.’ ‘Sorry,’ I said. ‘There must be a bad link in my spreadsheet.’ ‘SORRY!?’ he yelled contemptuously, before screaming, ‘DON’T BE SORRY. BE RIGHT FOR FUCK’S SAKE. IF THAT NUMBER IS WRONG HOW DO I KNOW THAT ANY NUMBERS ARE RIGHT? THIS IS USELESS SHIT, LARS. BAD, BAD, BAD.’

At this point I was already leaving his office half-expecting him to hurl something at me. Ten feet from his office was where the night-shift word processing staff was sitting. Most of them were aspiring actors or musicians who took the job to pay the bills. A couple of them had been working on the supporting slides for our presentation. They all looked at me as I approached them after my verbal beating and the first guy I approached said, ‘Dude. Nothing can be worth that. He talked to you like you were a dog.’

Note to self: despite putting needles in voodoo dolls of my immediate bosses at the time, I can’t believe that some of those slave masters from the dark side are friends today . . .

If not busy:

Rule number 1: look busy

Same shit. We did not yet have Internet access in 1994 so we could not surf the net. Bummer. One guy read War and Peace inside a research report.

Go to the gym. Leave your jacket on the chair so it looks like you have just stepped away for a moment and make sure your screensaver is deactivated. These were the premobile phone days so once you escaped the building you were safe.

Order food. Make sure you order with people who will be too busy to eat so you can use their dinner allowance and get yourself some nice sushi and the miniscule pyrrhic victory that comes with eating well alone in a dull conference room.

Order car. Take the fire escape stairs down a couple of floors so nobody sees you leaving the office early and thus avoid the 5pm call from the staffing person on Friday telling you that you have been put on a new project.

Lars Kroijer is the author of Money Mavericks: Confessions of a Hedge Fund Manager, published by Financial Times Prentice Hall