Institutional Investor's Alpha Magazine - June 2008 - (Page 60)

ALPHA HALL OF FAME JACK NASH $162 million — including $50 million of their own capital from the 1982 sale of Oppenheimer — they took their game to new heights. When they liquidated Odyssey in 1997, they had $3.3 billion in assets under management. Nash, 79, lives in quiet retirement today and says a good part of the secret to the success of Odyssey was in how the partners made hiring decisions. “Odyssey was a real partnership. We built long-standing relationships with investors — who did very well — many of whom were with us from the beginning. Importantly, everyone had a very proﬁtable experience with us. The ﬁrm was a very good training ground for young people coming into the business. They learned about balancing risk and reward. We gave them the ability to make decisions and allowed people to make mistakes and to think differently. We didn’t secondguess people. We had a very rigorous process for deciding who we would hire. It included psychological testing, which looked for ﬂexibility, open-mindedness and decisiveness among the characteristics we wanted. When interviewing prospective hires, we tried to understand the person’s character. I’d ask, ‘Who are your heroes? Where do you see yourself 20 years from now?’ The idea was to really understand the character of who it was we might be asking to join our team. We wanted people who would act well under pressure — in both good times and bad. How they handled the good times was perhaps even more indicative of their character than how they handled the bad. We carefully evaluated the risk-reward ratio in our major investments. We wanted to be sure that the upside opportunity far outweighed our analysis of the downside risk. I think that our willingness to be open, to change direction if necessary and to make decisions differentiated us. That included cutting losses when the time came. It was very helpful to have such a valuable partner as Leon Levy, who clearly had the greatest inﬂuence on my career. We were really co-equal, and that was important. We complemented each other very well. We had different strengths, weaknesses, areas of interest, personalities and perspective. But together we made a powerful combination. He was more optimistic and creative. Overall, I think the wisest investment decision was our call on the bond market in the early 1980s. We began aggressively taking long positions in bonds at a time when the country had just gone through the inﬂation of the 1970s. It was a contrarian point of view at the time, but one that worked out extremely well for us and our investors. We saw ﬁ rms that grew too fast. They took in money just because it was available but didn’t have the resources to properly manage or administer it. We were very careful to avoid that. Many hedge fund managers don’t understand leverage today. It’s very sweet on the way up. But not on the way down. It has got to be used carefully and strategically.” — Interview by Stephen Taub “Interviewing prospective hires, I’d ask, ‘Who are your heroes? Where do you see yourself 20 years JACK NASH from now?’” Photographs courtesy of the Nash family. uring the heyday of Odyssey Partners, visitors routinely lined up outside Jack Nash’s ofﬁce every afternoon from 4:00 to 6:00 as he held court with portfolio managers, analysts and corporate executives — all there to, wittingly or not, prime one of the two great minds behind a ﬁrm that was well ahead of its time. When Nash and his partner, Leon Levy, opened Odyssey in 1982 (becoming one of the ﬁrst of many funds to take its name from Greek mythology), they began a fast journey into a future that for most money managers was still a generation away: Odyssey from its inception looked eerily like today’s big multistrategy hedge funds, blending day-to-day trading, traditional private equity investment, leveraged buyouts, distressed-debt positions and activist investing to deliver a 22.4 percent net annualized return over 15 years. Nash was the operational force behind the ﬁrm, doling out resources to traders and portfolio managers, watching over their shoulders and acting as the ad hoc risk management ofﬁcer, all the while making investment decisions with Levy. It was a role he had developed at Oppenheimer & Co., where he and Levy were the two seniormost partners. After Nash and Levy launched Odyssey with 60 • INSTITUTIONAL INVESTOR’S ALPHA • JUNE 2008

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - June 2008

Investor's Alpha Magazine - June 2008 Contents Letter From the Editor Longs & Shorts Cover Story: Alpha Hall of Fame Bruce Kovner Michael Steinhardt Kenneth Griffin Louis Bacon Steven Cohen George Soros James Simons Seth Klarman Julian Robertson Jr. Jack Nash Leon Levy Paul Tudor Jones II Alfred Winslow Jones David Swensen Looking Ahead: Back to the Future Research Center: Europe Hedge Fund 50 Unhedged: Let the Sunshine In

Institutional Investor's Alpha Magazine - June 2008

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