Star fund managers are not often noted for their modesty. Hedge fund managers even less so.
Dixon Boardman, managing director of New York’s Optima Group, certainly doesn’t suffer from lack of self-esteem. “Savvy investors have long known that the best and brightest money management talent can be found in hedge funds,” he says, not referring to himself in any way, naturally.
In fact some investors may rank hedge fund managers alongside such other popular breeds as lawyers and journalists. After all, following Long-Term Capital Management’s single-handed effort at nearly causing a global market meltdown in 1998, the term “hedge fund” now sounds a bit like “bubonic plague” to many people’s ears.
However Boardman is keen to separate his business from the likes of LTCM. Optima manages $1.5 billion through sponsorship of multi-manager and single-manager hedge fund programmes.
“While attention has been focused on sensational headliners such as George Soros, Julian Robertson and Long-Term Capital Management, the reality is that these large macro funds of the past represent only the tip of the iceberg,” says Boardman.
“The hedge fund industry is estimated at over 3,000 funds. Many of these produce consistent returns with little fanfare,” he adds. “This may not make for interesting headlines but it is extremely interesting to investors seeking to preserve and steadily grow their capital while avoiding the roller coaster ups and downs in the market.”
To be fair to Boardman, you can’t argue with his performance. The Optima fund, the Flagship he launched 12 years ago, has compounded at 15.2% per year with only two-thirds of the volatility of the S&P500.
Optima produces these numbers by allocating funds to a selection of US equity-oriented hedge fund managers, each of which picks stocks on the long and short side.
| Boardman: has all the answers | ||||||
The results speak for themselves: in the year to date, the fund is up 14.6% against the S&P’s loss of 2.2%.
So while many investors will be feeling somewhat beaten up by the markets this year, those lucky enough to be with Optima will probably sing along with Boardman’s marketing blurb which says: “As stock prices have become increasingly erratic, many investors have been left feeling uneasy about the market, if not despondent about mounting losses among their once darling tech holdings.”
Go on, if you’re doing well, why not crow about it? “Most of Optima’s managers have had a very different experience. If anything, the investment environment has been particularly conducive to their ability to apply stock-picking skills on both the long side and the short side.”
Of course, it’s not quite that simple. “This is much more than trading instinct, though,” explains the Optima manifesto. “Rather it reflects a sober assessment of market dynamics, a pragmatic approach to portfolio hedging and, above all, a deep, research-driven understanding of companies. When other players overreact, succumbing to panic selling or getting carried away by speculative buying, Optima’s managers tend to have the insight to know when stock prices have diverged from fundamentals – and to know what to do about it.”
So there it is. Easy when you know how.
