Institutional Investor's Alpha Magazine - November 2007 - (Page 35)

stocks that are either under- or overvalued. “We expect to know more about a company than any other noninsider,” says Ainslie. As of March 2000 only one investment professional had ever left Maverick. That would soon change as members of Ainslie’s senior team looked for new challenges. Late that year Duke Buchan III, a former Merrill Lynch & Co. investment banker who had overseen the ﬁnancial sector at Maverick since 1997, left to start his own firm, Hunter Global Investors. In 2002, Bishop departed for Soros, and sector head Lee Hobson left to launch Dallas-based Highside Capital Management. Maverick had also gone through two technology sector heads by the end of 2002. The next year was one of Maverick’s worst. In 2003, Maverick was up just 4.6 percent, compared with a 28.7 percent return for the S&P 500. “Lee Hobson had left, I had left, Lee [Ainslie] was doing technology on his own,” says Bishop, who today runs his own hedge fund ﬁrm, New Haven, Connecticut–based Impala Asset Management. “I think that is one reason that year was so hard for Maverick.” Ainslie quickly brought in new talent, hiring investment banker Gunnar Overstrom from Morgan Stanley to replace Buchan and commodity and cyclical industries expert David Snyder to take over from Bishop. (Bishop helped recruit Snyder, who had been working as a portfo- lio manager at Zweig-DiMenna Associates in New York.) But it took Ainslie more than 18 months to find a new technology sector head — former Tiger analyst Andrew Warford, who had been managing a technology portfolio at Viking in Greenwich, Connecticut. Turnover was only part of the problem. Low-quality, high-momentum stocks were leading the bull market, making it difficult for pure fundamental long-short investors like Maverick. “Operation enduring bubble” was the phrase Lone Pine’s Mandel coined to describe 2003. “Stocks went up — virtually all stocks — regardless of fundamentals, valuation, accounting practices, competitive positioning, quality of management, financial viability, earnings momentum, and every other factor that we consider critical,” Ainslie wrote in his year-end investor letter. Maverick’s traditional areas of strength, technology and health care in particular, were also becoming tougher. “The business of investing in health care has changed signiﬁcantly,” says Steven Kapp, 47, head of the health care team since 1996. “Probably the biggest change was Regulation FD.” (The Securities and Exchange Commission implemented Reg FD in 2000 to prohibit public company officials from disclosing material information to any private investors without first making it available to everyone.) “We used to have much Proskauer Rose, a leading hedge fund and private equity law firm, is pleased to announce the opening of its new office in London. London Berkeley Square House Berkeley Square London W1J 6BD United Kingdom Phone: 44.20.7083.8500 Fax: 44.20.7083.8501 Managing Partner: Matthew Hudson NEW YORK | BOSTON | LONDON | PARIS | WASHINGTON, D.C. | LOS ANGELES | NEWARK | NEW ORLEANS | SÃO PAULO | BOCA RATON www.proskauer.com 1585 Broadway, New York, NY 10036-8299 | 212.969.3000 http://www.proskauer.com http://www.proskauer.com

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - November 2007

Institutional Investor's Alpha Magazine - November 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Patriot State The Good Guys: College Connection Interview: Currency of Change Cover Story: Comeback Kid Strategies: Masters of Art Research Center: Alpha Awards: Top Technology Providers Top Analysts Alpha Bytes: Critical Choice Unhedged: Commentary: Banking on a Bubble

Institutional Investor's Alpha Magazine - November 2007

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.