EXCERPT: Diary Of a Hedge Fund Manager

My maiden visit to Jon Dawson’s Southport, Connecticut, hedge fund shop was in the spring of 2000. A few months earlier, the firm’s name officially, legally changed for the third time, this time going from Dawson-Samberg Capital Management to Dawson-Giammalva Capital Management. The surroundings were way different than the environment at CSFB.  I knew the buyside life was a bit more relaxed than the frantic sellside, but I didn’t expect a group of 20 or so people sitting around quietly in a three-story former factory that had partially converted into an office space. It was cozy, and I felt like I was back in Thunder Bay at my buddy’s moose hunting lodge.

Dawson wore a button-down shirt, denim pants, and cowboy boots. His spacious office, decorated with photos spanning a long career rubbing shoulders with corporate America, was on the second level, just off the trading floor. Analysts, administration, and operation folks were on the ground level or upstairs, on the third floor. When Dawson wanted to do a trade, he opened the door of his window-enclosed office and shouted out the order to his traders sitting just outside, loud and deliberate, piercing the otherwise laid-back aura.

I took the train to Southport specifically to meet Dawson. His protégé, Russell Herman, was trying to get me to come work with him in Dawson-Giammalva’s New York Office. I was also being recruited by the head trader at Viking Global Investors to come work on its execution desk. Viking was confounded in 1999 by former Tiger Management Equities chief (and Norwegian SEAL Team member) Andreas Halvorsen, who served as the firm’s CIO. Halvorsen exploded out of the gate with 80 percent plus returns in 2000. While it was tempting to hitch my wagon to Halvorsen’s star, the fact remained that I had a natural rapport with Herman. Besides, I didn’t want to execute someone else’s trades—I wanted to make them.

Dawson-Giammalva had just hired a former teammate of mine at Yale, Daryl Jones, an Albertan and hardnosed defenseman. Jones landed in Dawson’s New York office as a junior analyst; someone young and raw, whom they could train—and at least initially—not pay that much. Jones had spent two frustrating years training as an investment banker with J.P. Morgan. After a discussion with Tiger Williams, in which Williams compared I-bankers to figure skaters and hedge fund managers to hockey players, Jones had decided to get into the hedge fund game.

I’d passed Jones’ resume along to Herman, and Jones was hired to work on a newly launched tech fund being run by another Dawson protégé, an analyst named Geoff Gross. Gross had recently become a tech PM following two years spent as a tech analyst, which he became after Art Samberg and Dan Benton went off on their own. Samberg and Benton ended up turning Pequot into a $16 billion hedge fund empire by the end of 2000, making it for that period the single largest hedge fund operation the money management industry had ever seen. Within a year from that pinnacle, though, Samberg and Benton had split up.   

Although I was tight with Herman after months of covering him at CSFB, my joining the firm was hardly a done deal. I still had to go meet Dawson. I remember him telling me to sit down and then immediately launching into a barrage of questions. Most of them were geared toward finding out exactly who I was, with less emphasis on my abilities as an analyst. Where was I from? What did my dad do for a living? Why did I play hockey at Yale? Why did I want to work at a hedge fund? He was reading me, not interviewing me. Honestly, I can’t recall any of the answers I provided during the probe. But I do remember what Herman told me later that night, about what Dawson had told him. I was on the train back to the City, and Herman rang my cell phone to give me a briefing.

“Well, Keith, John doesn’t think you know anything about investing. And he told me he thinks I’m taking a risk hiring you. But he liked meeting you.  He said he thinks you’re a winner.” Game on.