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0
This report is concerned with the analysis of Lee Ainslie’s hedge fund Maverick Capital in
February 2003. In addition, Maverick’s launch of new funds in February 2005 and the
dramatic loss of performance in Q3 2008 are critically assessed.

The evaluation of Maverick’s investment strategy and policies using a ‘valuable, rare,
imperfectly imitable, nonsubstitutable’ framework revealed that Maverick definitely has a
competitive advantage in the investing domain of hedge funds. No definite conclusion was
drawn for the fund’s sustainability, i.e. sufficient protection against failure or asset los.

Maverick’s corporate structure and culture was found to support the operation of a high-
performance team, representing a great asset and edge to the fund. The sustainability of the
team, especially motivation and compensation sponsored by continuous fund growth, calls for
critical review.

The launch of new funds in 2005 was found to achieve only few of Maverick’s objectives and
to address only some of Ainslie’s concerns. Especially debatable is the potential for larger
financial gains for employees versus the lack of potential for larger financial gains for
investors in percentage terms. The launch did not seem to comply with Maverick’s
Investment Policy #10: “Is it good for our investors?”

In 2008, Maverick has reached the maturity stage, implying stagnation in investment
innovation and diminishing returns. The author’s recommendation to Ainslie is to re-allocate
significant assets to Maverick Stable, and to eventually spin it off. That would give one or
more of Maverick’s partners and several IPs a chance for career advancement and provide
room for the remaining staff at Maverick to continue growing. The residual, significantly
smaller Maverick fund under Ainslie would be in a good position for strategic re-orientation
and incremental investment innovation and ready for a new growth phase.

1
The analysis of Lee Ainslie’ s hedge fund Maverick Capital is based on the HBS case study
“Maverick Capital” written by Andre F. Perold (HBS 9-204-013, rev. May 24, 2004) and two
quarterly investor letters issued by Maverick Capital at February 4, 2005 and at October 9,
2008. The analysis focuses on Maverick Capital’ s investment policies and organizational
structure / culture at the time of the case - February 3, 2003. In addition, Ainslie’ s decisions
about launching new funds in early 2005 and the corresponding balance between sustainable
asset growth and risk-return-profile will be addressed and evaluated. Finally, attention is paid
to the dramatic loss in performance of Maverick Capital’ s funds during the third quarter of
2008 including recommendations to Ainslie on the future of his funds.

! ! " # $%%#

2
 # $% !&&$ ' ()

Lee Ainslie III (called Ainslie) - managing partner of Maverick Capital (called Maverick) -
represents not only the face of the hedge fund but imprinted his philosophy about equity
investing into the investment policies of the firm’ s Hedged Equity Strategy (HES). The vision
and fundamental goal of the fund according to Ainslie is:

“to preserve and grow investor capital

and to do so in a sustainable and highly ethical way”

Ainslie’ s investment philosophy is strongly influenced by the ideas of Julian H. Robertson Jr.,
the manager of Tiger Management and a hedge fund icon of his time. His core beliefs: (1)
”The key to Tiger's success over the years has been a steady commitment to buying the best
stocks and shorting the worst.”, (2) “I've not believed in playing the markets. I've always
believed fundamentals will win out.” and (3) “Life and investing are long ballgames.” are
reflected in the classic long/short strategy1 employed by Maverick. The resulting low net
exposure to the market allows Maverick’ s investment professionals to focus on the selection
of individual long and short positions.

The long bias (long/short ratio > 1) of Ainslie’ s HES is based on the perceived disadvantages
of shorts versus longs and the expectation that the market would appreciate over the long
term. Furthermore, short selling misaligns interests of the seller and the company
management – an ethical aspect of importance to Maverick’ s investment team.

Maverick’ s investment professionals (IP) utilize their extensive industry experience and
contacts to perform in-depth hands-on research with the goal to pick the most attractive long
and short positions - each IP is responsible and accountable for about 5 positions. The firm
attributes continuous success in stock-picking at the team’ s fundamental, bottom-up analysis,
striving to “know more about each stock … than any other noninsider on the planet”.

Maverick’ s IPs adopt a long-term perspective on investments but take advantage of

opportunities presented by the market. The resulting HES fund outperformed the S&P by
more than 16% in average since inception in 1995.
1
For risk-return-profile of long/short equity strategy versus other alternative investment strategies see Figure 4.

3
Ainslie reviews the funds positions - with particular attention to the largest - every night for
size according to risk/return, gross and net exposure and long/short correlations. In this way,
he not only obtains a top-down view of the total portfolio but he could - not being emotionally
tied to any sector - move capital quickly and efficiently.

Ainslie has the final word on all investment decisions, but leaves significant discretion and
authority to each sector head. The internal decision making process is characterized by
healthy debates and compromises, with Ainslie acting as sounding board and devil’ s advocate
- testing each IP’ s conviction on the “ there are no holds” rule (stocks are either a buy or a
sell) and for potential thesis creep (validity of the original investment thesis).

Ainslie considers leverage a prudent means to achieve a volatility of roughly half of S&P 500.
However, he uses a controlled and conservative long/short ratio to temper leverage effects.
While gross exposure has reached 270%, the long/short ratio was kept below 1.5. Maverick’ s
managing partner strived to avoid any scenario resulting in a margin call for the fund.

Finally, Ainslie expected the trading department to avoid unnecessary transactions costs by
skillfully avoiding dislocation of stock prices when moving in and out of positions, by
applying improved technology and by better relationships and terms with trading partners.
The investment policies at Maverick are summarized in Figure 1.

1. Market timing is futile.

2. A positive bias to the market is prudent.
3. No simple pairs-trading. No directional bets.
4. Know more about each stock than any other noninsider on the planet.
5. Adopt a long-term perspective but take advantage of opportunities.
6. Review fund nightly top-down. There are no holds. Eliminate thesis creep.
7. Don’t ask “How leveraged can we be?”, ask “How leveraged should we be.”
8. Never allow for a margin call.
9. Watch transaction costs.
10. Check key decisions by: “Is it good for our investors?”

Figure 1: Maverick’s Investment Policies in a Nutshell

The author considers Ainslie’ s positioning of the fund as rather traditional and conservative
within the hedge fund community. Maverick’ s managing partner trusts many rules originating

4
from value investors such as Graham or Buffett which were brought to him by Tiger’ s
Robertson. He basically added only the aspect of regularly exploiting market opportunities.
Ainslie strives to simply combine a biased and leveraged long/short strategy with (1) superior
stock picking by very insightful IPs, (2) operational excellence in allocation and trading, and
(3) consistent measures for risk reduction and mitigation. His approach is transparent and
clear, supporting his vision of servicing investors with a believable basis.

The question arises: “Does Maverick have an edge in investing?”. Ainslie beyond doubt has
been able to grow Maverick Capital and provide returns to investors in an exemplary way.
However, past performance is no guarantee for future performance. Therefore, ‘edge’ is
interpreted as sustainable competitive advantage, providing visibility to Maverick’ s future
outperformance in investing.

Grant [RG] defines competitive advantage as follows:

“ When two or more firms compete within the same market, one firm possesses
a competitive advantage over its rivals when it earns (or has the potential to
earn) a persistently higher rate of profit.”

Dollinger [MD] argues:

“ The ultimate goal – and the one that is very difficult to achieve - is
sustainable competitive advantage.”

The resource-based theory [MD] requires certain characteristics to apply to a firm’ s resources
- here: Maverick’ s investment policies and the means to implement them - in order to create
sustainable competitive advantage. More specifically, four VRIN characteristics (valuable,
rare, imperfectly imitable, nonsubstitutable) are required. Dollinger [MD] further states:

“ When a firm possesses and control resources with these four characteristics,
it can withstand competitive pressures.”

The competitive pressures would otherwise erode the firm’ s competitive advantage.

The level of focus, consistency and clarity in Maverick’ s investment policies makes them
certainly valuable. However, the means to implement Maverick’ s investment policies -
Ainslie himself and the competencies and skills of Maverick’ s IPs and trading staff - represent
the more valuable part of Maverick’ s resources. One could state that the value is determined
by and lies in the nearly perfect alignment of strategy and resources at Maverick.

5
Most elements of Maverick’ s investment policies and the corresponding investment
operations are not considered being rare. Ainslie stands for balanced performance levels,
safety measures (e.g. internal capital reserve) and avoidance of risky directional bets but also
for strong asset growth and above-average gross exposure. However, the combination of these
elements - especially the emphasis on consistency and sustainability - positions the fund as a
non-common example, a maverick.

The potential and risk for imitation of the ‘System Ainslie’ is considered to be moderate,
possibly even low. While there is a significant amount of information (e.g. HBS case at hand)
available for analysis, actual imitation of Maverick’ s approach should be hard because of
limited people resources and the required alignment and fine-tuning of strategy and resources.

There are other very successful hedge funds employing different combinations of strategy and
resources. These funds may achieve returns similar to Maverick. Maverick’ s outstanding
historical performance is considered to be a direct result2 of its resources. No feasible
substitutes are available for the resources (e.g. less qualified IPs or more loose investment
policies) which would have enabled these performance levels.

Basically all four VRIN characteristics score high for Maverick’ s investment strategy and the
corresponding resources. In summary, the author concludes that Maverick definitely has
an edge or competitive advantage in the investing domain of hedge funds3. The
sustainability aspect of Maverick’ s competitive advantage is more difficult to assess. At the
time of the case, it is not obvious whether Maverick’ s moderate volatility represents sufficient
protection against failure or asset loss. Without the available hindsight and without further
asset growth, the author is tempted to acknowledge a high level of investment protection.

2
See in-depth preparation of the decision making process for successful investments in Kmart and Kingfisher by
Maverick’ s IPs.
3
The assessment is based on a comparison with the absolute measure of the VRIN characteristics. For a relative
comparison with other hedge funds pursuing similar strategies, not enough data was available.

6
 # $% !&&$ ' ()

After the opening of Maverick to outside investors in October 1993, Ainslie spent time - next
to his investment activities - to foster Maverick’ s talent and culture as the foundation for
future growth. At the time of the case, Maverick exhibits a flat organization with typical
aspects of a power culture [CH, PC] as shown in Figure 2. Power cultures are frequently
found in small entrepreneurial organizations such as venture capital-backed startups or hedge
funds. At Maverick, Ainslie serves as the patron god and central power source with rays of
power and influence spreading out from that central figure. He is the all-powerful head
overseeing all investment operations and owning all key investment decisions.

Maverick’ s power culture depends on trust and personal conversation for communication.
Ainslie exercises control largely through the selection of key individuals - Maverick’ s
partners and sector heads. The resulting culture is proud and strong as evidenced by the
tremendous employee retention rates, and is able to move and react quickly as proven by the
consistent one-day-investment-cycle4 Ainslie implemented.

A power culture puts a lot of faith in individuals, especially in Ainslie. However, hedge fund
managers are anyway perceived as the face, competence & decision center of their fund(s) as
visualized in Figure 3. For people businesses such as hedge funds, the fund is viewed by
investors and by the press as ‘Ainslie’ s Fund’ instead of ‘Maverick Capital’ . In contrast, for
technology businesses such as semiconductor startups utilizing a power culture, the public
face of the company is often formed by a branded technology instead of the firm’ s CEO.

A key risk for sustaining a power culture lies in low morale and high turnover in the middle
layers - sector heads for Maverick. Ainslie counters this risk by providing constant challenges
to his key people and by compensating them better than at any other firm. Another risk is the
size of web which in case of Maverick has grown constantly over the years in lock-step with
the growth of the funds assets. Sustainability of a power culture also depends on solving the
succession issue. However, Ainslie is “only 44 years old” and his “golf game is miserable”.

4
The one-day-investment cycle refers to the span from the daytime’ s analysis and research work of IPs to
Ainslie’ s nightly reviews of recommendations and the next-day trading of resulting position changes.

7
The question arises: “ Does Maverick have an edge in organizational structure and culture?” .
Ainslie’ s efforts at Maverick resulted in outstanding returns and high retention rates. Above
question relates to the contribution of Maverick’ s organizational structure and culture to the
fund’ s success. Therefore, ‘edge’ is translated to high-performance team, providing visibility
to sustainable beyond-average returns for Maverick’ s investments.

A high-performance team combines innovation (investment policies) and talent (sector heads,
IPs, trading staff) to provide value-added services (sustainable investment performance) [KD,
PS]. Since performance and teams are almost inseparable [KD] it was of critical importance to
Ainslie to form a team fulfilling the four key criteria for effectiveness: common commitment
and purpose, performance goals, complementary skills, and mutual accountability [KD].

At Maverick, a potential employee’ s team-play capability is already checked thoroughly

during the interview process. The firm is looking for people who are (1) intimately familiar
with Maverick’ s business purpose by experience at investment banks or other hedge funds,
(2) committed to hard work, (3) smart and decent, and (4) enjoyable to be around. The need
for complementary skills is respected when hiring people for very specific purpose such as
David Singer as a Principal for the new Biotech sector5. He added experience from founding
three biotech companies and complemented the skills of IPs in Maverick’ s healthcare sector.

Maverick’ s compensation rewards fund performance the most, aligning individual decisions
with the interest of the fund and supporting mutual accountability. The large compensation
package for hedge fund employees in general and at Maverick is suitable to create acceptance
and motivation towards the fund’ s performance goals. Additional characteristics of
Maverick’ s corporate culture are a much-liked non-confrontational style combined with
collegiality, and a deep sense for integrity and ethics, fostered by Ainslie personally.

In summary, the author concludes that Maverick’s corporate structure and culture
supports the operation of a high-performance team, representing a great asset and edge
to the fund6. Again, the sustainability of Maverick’ s team is difficult to assess. Especially,
motivation and compensation sponsored by continuous fund growth calls for critical review.

5
See Maverick Capital Investor Letter, February 2005, page 2.
6
The assessment is based on a comparison with high-performance team characteristics. For a relative
comparison with other hedge funds pursuing similar strategies, not enough data was available.

8
 # *% !&&+ ' ()
! " #$

Ainslie addressed the investors of Maverick Capital in his quarterly letter to investors on
February 4, 2005. He stressed the importance of consistency at Maverick with regards to
strategy, investment team, returns and investor base. In addition, he voiced Maverick’ s
intention to (1) balance consistency with the need to innovate and (2) balance moderate
growth with an appropriate fund size for Maverick’ s mission. Ainslie’ s most important
message, however, was the start of new initiatives at Maverick to realize these balances:

o Three new funds: Maverick Neutral, Maverick Neutral Levered, and Maverick Long.
o Access to internal fund Maverick Stable for external investors.
o Changes to fee structure for Maverick funds to incentive long-term commitment.

Ainslie claimed that the new initiatives are “ the latest developments in a long line of decisions
… to sustain our success in a variety of environments” 7.

Two of the new funds - Maverick Neutral and Maverick Neutral Levered – will no longer use
any net exposure to the market but levels of 200% to 400% of gross exposure. Both funds will
accept $500m for 2005. In contrast, Maverick Long will apply 100% long exposure combined
with no leverage. For 2005, $1bn outside capital will be accepted. The key fact about the new
funds is that all three will invest in the exact same long and short portfolios as Maverick’ s
core fund, but in different ratios to achieve their target net and gross exposures. The opening
of Maverick Stable allows outside investors to access the firm’ s internal fund-of-funds. There
are commitment periods of one, three or five years depending on fund type. The outside
capital accepted equals $200m. The new fee structures basically decrease management and
performance fees in exchange for longer commitments, e.g. from 2% / 20% for one year to
1.5% / 15% for five years. The question is: “ Did the launch of the new funds help Maverick to
achieve its stated objectives and address Ainslie’s concerns as of February 2003?”

In February 2003, Ainslie was concerned with the pros and cons of potential future growth of
the fund. Further growth would strengthen Maverick’ s ability to attract and retain top talent
by offering larger financial gains, prestige, and new challenges and opportunities for

7
See Maverick Capital Investor Letter, February 2005, page 10.

9
advancement. However, rapid growth has caused the demise of many successful funds. Also,
fund performance tended to decrease with increasing fund size. Maverick’ s team had
identified five options: (1) decrease position liquidity, (2) hold more positions, (3) invest in
larger companies, (4) decrease gross exposure, and (5) enter new businesses or strategies.

The introduction of the new funds in February 2005 is interpreted as a combination of options
1 and 5. The partial renunciation of biased long/short investing represents a strategic move
towards expansion and broadening of Maverick’ s positioning. Especially, the opening of
Maverick’ s internal fund-of-funds follows the recent popularity of such funds and points to a
possible way of transforming Maverick from a pure-breed into a multiple-strategy fund. In
addition, the concept for the new funds (invest in existing long and short portfolios) realizes a
decrease in position liquidity.

The advantages of Maverick’ s decisions are:

o Potential for larger financial gains for employees in absolute terms.
o Economies of scope and scale: same # of IPs for same # of positions for larger assets.
o No conflicts in securities selection due to identical portfolios.
o Potential entry point for transforming fund into multi-strategy fund.
o Historical performance is assessable.
o New fee structure suitable to encourage investors to commit to longer periods.

The disadvantages of Maverick’ s decisions are:

o Few new challenges for IPs since operation of the new funds is a mere technicality.
o Few opportunities for advancement since “ no aspect of my job, or anyone else’s in the
investment team, has changed” 8.
o Decrease in relative diversification: larger assets but no larger # of positions.
o No potential for larger financial gains for investors in percentage terms.
o Partial renunciation from core competence: biased long/short investing.
o Loss of absolute control over total net exposure and gross exposure due to investors’
option to switch between funds.
o Total leverage for all funds together might increase when Maverick Neutral Levered
grows larger in the future.

8
See Maverick Capital Investor Letter, February 2005, page 7.

10
Maverick’ s decision to launch new funds is at least debatable. There are important
disadvantages coming with the advantages of the decision. Core objectives such as more
employee challenges and opportunities are definitely not achieved. Also, no measure for
improving the declining absolute fund performance (strong performance relative to markets
and peer group but weakening absolute returns) is visible. The most relevant advantage is
seen in the ‘launch’ of the internal fund-of-funds. Given Maverick’ s basic expertise in
managing a fund-of-funds, Maverick Stable forms a potential strategic step towards a more
diversified business model.

In summary, the author sees only few of Maverick’s objectives achieved and only some of
Ainslie’s concerns addressed by the launch of the new funds. Especially debatable is the
potential for larger financial gains for employees versus the lack of potential for larger
financial gains for investors in percentage terms. The launch does not seem to comply with
Maverick’ s Investment Policy #10: “ Is it good for our investors?” - see Figure 1.

The author strongly criticizes Maverick’ s decision to continue the growth of the fund.
Research on hedge funds found that: “ There is a capacity constraint for every hedge fund
style, most likely for every single hedge fund. Recent history has proven that once a fund
reaches enormous proportions the alpha diminishes or, even worse, turns negative. A hedge
fund manager should control size according to its capacity to implement its investment
strategy. One example was Julian Robertson’ s Tiger Management. Apparently, Julian
Robertson was constantly growing by accepting new funds. The funds grew fast without
reducing leverage or returning capital to investors. A hedge fund should keep its capital base
stable once it reaches an optimal size, either by closing the fund, returning accumulated gains
to investors or reducing leverage.” [AI].

Ainslie does grow Maverick without reducing leverage or returning capital to investors.
Instead, he decreases the fund’ s relative diversification, departs from the team’ s core
competence and potentially heads for Maverick’ s ELE9.

9
Extinction Level Event: Event characterized by sharp decrease in the number of species (here: hedge fund
assets) in a relatively short period of time.

11
 ' ,%!&&- ' ()
$

Q3 2008: Maverick is tarnished. Ainslie is disappointed, embarrassed, shocked:

Maverick Levered - 40.6%
Maverick Neutral Levered - 27.5%
The question is: “ What should Ainslie be thinking about Maverick’s future?”

At first, one may risk a look back to learn from history. The Tiger Management fund of Julian
H. Robertson Jr. closed in March 2000 [GM]. Tiger’ s downturn was caused by events similar
to the ones Ainslie faces: market valuations driven by the psychology of the crowds. Ainslie’ s
mentor bid against the skyrocketing multiples of internet and high-tech stocks. From
Robertson’ s point of view – using a value investing approach – these stocks were significantly
overvalued and definitely worth to short. In contrast, Robertson stayed long on traditional
stocks which completely fell from investors favor during the period 1998-2000. The resulting
decrease of Tiger’ s long/short spread led to continuously decreasing performance: -4% in
1998, -19% in 1999, -13.5% in Q1 2000. Robertson wrote to his investors. “ In a rational
environment, this strategy functions well. But in an irrational market, where earnings and
price considerations take a back seat to mouse clicks and momentum, such logic, as we have
learned, does not count for much. I have great faith that this too will pass, the difficulty is
predicting when this change will occur and in this regard I have no advantage.” [GM].

Ainslie foresaw that “ the biggest risk to Maverick’s stability … is a significantly down market
as our core funds maintain net long exposure at all times” 10. He certainly knew that: “ A single
hedge fund with only one line of business will suffer large losses from time to time.” [MS].
There are five warning signs for a hedge fund at risk: (1) size, (2) leverage, (3) transparency,
(4) funding, and (5) ‘Hubris’ [AI]11. Ainslie is certainly ‘guilty’ of committing (1) and (2) but
he could reduce both risks. While there is no ‘Hubris’ in Ainslie’ s communication, there is a
lack of acknowledgement that the uneducated crowd can bring Maverick down by ignoring
fundamental asset values for an extended period of time (Black Swan Principle: unlikely isn’ t
the same as impossible.). Also, Ainslie encourages investors to provide more secure funding
but he cannot truly ensure financial supplies to his funds during times of performance loss.
10
See Maverick Capital Investor Letter, February 2005, page 4.
11
For major hedge fund losses and ‘What went wrong?’ see Figure 6.

12
Borrowing from the Product Life Cycle framework, Maverick has reached the maturity stage,
implying stagnation in investment innovation and diminishing returns: decreasing # of
positions per IP from 50 in 1995 to 5 in 2002 without increase in percentage returns12;
increasing gross exposure from 170% in 1995 to 270% in 2002 without increase in percentage
returns13. Ainslie needs to act to prevent Maverick to reach the decline stage.

The author sees the following options for Maverick’ s managing partner as of Q3 2008:

1. Give in, i.e. close the fund, and return accumulated gains to investors, play golf.
2. De-risk the fund, reduce assets, and continue as usual - heading for a slow decline.
3. Re-allocate significant assets to Maverick Stable, eventually spin it off.
Option 3 - the author’ s strong preference - would give one or more of Maverick’ s partners and
several IPs a chance for career advancement and provide room for the remaining staff at
Maverick to continue growing. The new firm should have reasonable chances to flourish: “ As
a hedge fund expands its strategies, it becomes a multistrategy fund. A fund-of-funds is a
multi-strategy fund that is built by investing in many independent hedge funds. There are
advantages to both routes for diversification and risk reduction.” [MS]. The residual,
significantly smaller Maverick fund under Ainslie would be in a good position for strategic
re-orientation and incremental investment innovation14 and ready for a new growth phase.

According to Myron S. Scholes [MS]:

“ The future for hedge fund investing is exciting, dynamic, and challenging.”

12
See Exhibit 6 in the case.
13
See Exhibit 2 in the case.
14
Both, strategic re-orientation and investment innovation are easier to implement with a smaller fund.

13
Maverick’ s goal was “ to know more about each stock in which we invest than any other
noninsider on the planet” which clearly hints at the objective of the firm to exploit market
inefficiencies. Personally, I maintain a strong faible for the exploration of possible ways to
exploit market inefficiencies. My in-company-project at RSM focused on the TVM Capital’ s
investment strategy for a to-be-raised venture capital fund targeting the semiconductor
industry. The research I performed and the considerations I applied exhibit many similarities
to the daily routine of Maverick’ s investment professionals – especially with regards to the
very detailed industry analysis which for me translated to technology/startup analysis. The
observation of similarities helped me to see more clearly the bigger picture behind the
investment activities in hedge funds and venture capital funds: superior knowledge and
insight forms an excellent source for sustainable success either represented by return for
capital funds or represented by product quality and market share for regular firms.

Ainslie’ s dilemma “ Growth versus Performance” also applies in strikingly similar form to my
employer Silicon Hive, a venture capital-backed high-tech firm based in Eindhoven. Silicon
Hive managed to grow from about 5 employees to 50 today. The revenue during this period
grew from about $0.5m to $4.5m for 2008. The growth to the current level was certainly
facilitated by the Philips Technology Incubator which founded and sponsored Silicon Hive
during the early years. However, many capable entrepreneurial firms reach that stage and
more or less offer themselves as acquisition targets with the objective of returning the money
(or better a multiple of it) to their investors. The move is usually dictated by the insight that
the firm will not be able to continuously grow revenue and maintain margin as required for an
IPO and beyond. The firm’ s business model or the underlying competitive advantage (aka
‘edge’ ) is not sufficient to reach this goal of all goals. Silicon Hive’ s management today faces
a very similar dilemma: “ Should Silicon Hive ask for another round of funding to grow the
internal resource base and subsequently try to boost revenue while maintaining margin?” .

The author’ s key take-away:

Semiconductor sector manager at fund XXX sounds like THE perfect career goal.
I will try to exercise my edge with a semiconductor VC firm.

14
 %&&

Bibliography (in alphabetical order)

[AI] Alexander M. Ineichen

“ In Search of Alpha – Investing in Hedge Funds”
UBS Warburg, Global Equity Research, October 2000

[CH] Charles Handy

“ Understanding Organizations”
4th Edition, Penguin Books, 1999

[DK] Richard Dobbs and Timothy Koller

“ Inside a Hedge Fund: An interview with the managing partner of Maverick Capital”
McKinsey on Finance, Spring 2006

[GM] Gretchen Morgenson

“ The End of the Game; Tiger Management, Old-Economy Advocate, Is Closing“
The New York Times, March 31, 2000

[KD] Jon R. Katzenbach and Douglas K. Smith

“ The High-Performance Organization - The Discipline of Teams”
Reprint from 1993 in Harvard Business Review, July-August 2005

[MD] Marc J. Dollinger

“ Entrepreneurship: Strategy and Resources“
4th Edition, Marsh Publications, 2008

[MS] Myron S. Scholes

“ The Future of Hedge Funds”
The CAPCO Institute, Journal for Financial Transformation

[PC] Prof. Bill Collins

“ Organizational Behavior”
Lectures Notes, EMBA Program 2007/2008, RSM

[PS] Prof. Philip Stiles

“ Human Resources Management”
Lectures Notes, EMBA Program 2007/2008, RSM

[RG] Robert M. Grant

“ Contemporary Strategy Analysis”
6th Edition, Blackwell Publishing, 2008

15
Figure 2: Inside View on Maverick’s Organization: Classical Power Culture

Figure 3: Outside View on Maverick’s Organization: Ainslie’s Fund

16
 Figure 4: Risk – Return Profiles for Alternative Investment Strategies

Figure 5: Value Proposition for Adding Long/Short Equity Hedge Fund to Portfolio

17
Figure 6: Major Hedge Fund Losses

18
 ! " # $ %& '&&(

19