In “Hedge Hungers”, Mark Yusko, manager of a fund of hedge fund, summarized the traits that distinguish great fund managers from the mediocre and the bad.
Simple yet insightful, can’t agree more.
Good traits
1. Independence
- Generate independent views, contrarian or not
2. Guts
- Willingness to take intelligent risk and bet BIG even the odds are not very very high (59%)
3. Humility and Intellectual Honesty
- Look for ‘where we could go wrong’
- Admit and correct mistakes quick
4. Connections
- Networking, with the RIGHT people
5. Ambition
- Desire to win
6. Smarts
- Book smarts and street smarts, strong pattern recognition ability
7. Respect for Employees
- Listen to employee ideas and pay them handsomely
8. Integrity
- People that don’t cut corners. Small dishonesty potentially lead to big trouble later.
Bad Traits:
1. Red-Ferrari Syndrome
- Enjoy buying ‘new toys’ rather than managing its business
2. Calling in Rich
- Overconservative when too much of fund mgr’s wealth is in the fund
3. Personal Tragedy
- Divorse, lost of loved ones etc. will bring emotional instability
