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Inside ride during hedge funds glory days

Book Review: You don’t have to completely “get” funds to get value from ex-manager’s book

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  • Written by  Derek Hayes
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  • Comments:   DISQUS_COMMENTS
Diary of a Hedge Fund Manager: From The Top, To The Bottom, And Back Again, by Keith McCullough and Rich Blake, Wiley, 224 pp. Diary of a Hedge Fund Manager: From The Top, To The Bottom, And Back Again, by Keith McCullough and Rich Blake, Wiley, 224 pp.

I know next to nothing about hedge funds. This made me a bit skeptical when I first began reading Diary of a Hedge Fund Manager, the story of Keith McCullough in that field. For me, and I suspect many other community bankers, Wall Street is something of a fairy tale place, a world accessible only through movies and the like. It is a place where people work in trendy, sealed-glass office towers, have six monitors on their desks, and spend more money on specialty coffee in a year than I make.

These points made me slightly apprehensive about my ability to connect with this book. Thankfully, the authors’ easy-to-read style and ability to clearly articulate, for the layman, this seemingly mystical world quickly turned my skepticism to enjoyment.

Don’t get me wrong--the book contains a level of detail that sometimes caused my eyes to glaze over. But I recognize there are many who possess more knowledge in this area than I and, as a result, would appreciate this depth.
 
Author’s personal financial odyssey

Today, McCullough is the CEO of Hedgeye Risk Management. Beforehand, he spent a decade managing money at The Carlyle Group’s hedge fund, Magnetar Capital, Falconhenge Partners, and Dawson-Herman Capital Management. He began as an institutional equity sales analyst at Credit Suisse First Boston.

McCullough recounts his rise and fall (and rise again) in the hedge fund business. He starts with his humble beginnings in Thunder Bay, Ontario (which, incidentally, is colder than Mars most of the year) and his early lessons learned as a young hockey player who dreamed of playing in the NHL.

By  his own admission, McCullough wasn’t always the most talented athlete on the ice, but he possessed an intense level of determination and was willing to do whatever it took to win. The more I read, the more I found myself liking the book and appreciating the journey McCullough endured.

Hockey skills took McCullough from Thunder Bay to Yale University, and his tenacity and work ethic took him from Yale to the Street. In a job interview with Lehman Brothers (a job he didn’t take), McCullough was asked by the interviewer to describe why he was the right material for their company. His answer (I don’t want to spoil the story completely) represented one of the take-away themes of this book and, I think, really encapsulates the author’s personality--and why he’s been so successful. Today, besides his day job, he is a commentator on financial news television and websites.

The chronological descriptions of the author’s career are of particular interest given its historical context--and McCullough’s own prediction along the way of a coming market collapse. In illustrating the state of the hedge fund business during this time, McCullough wittingly refers to the industry as “a bunch of English soccer hooligans chasing a rolling wheel of cheese down a steep hill.”
 
A lesson in financial career management

In a sense, I think the title is an unfortunate one because it could lead a potential reader to think they have to know about the hedge fund world to appreciate the book.

With the backdrop of the hedge fund world and money management, the book underscores the point that having a tireless work ethic and confidence in your own conclusions is the cornerstone of good business and individual success.

Beyond that, it also offers a level of technical application, allowing the reader to gain significant insight into McCullough’s training methodology--a system based on exhaustive research, significant frequent-flyer miles, and resisting the status quo.

All told, McCullough provides even the most novice financial reader with real insight and appreciation about understanding the market as a whole and the companies operating within it.

Buy it, read it, and go make your millions.

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