I’ve never quite understood the ‘star manager’ approach. It seems so dangerous for a fund company to put all its eggs in one basket. Or in one basket-case, as often seems to happen. No, it’s far easier to tick the boxes of repeatable process, a team-based approach and a stable staff list.
The worst-case scenario unfolded for Swiss Heritage a few years ago. They spent years pumping up their global-equities manager into a real superstar, selling his image around the world and even offloading two other teams to make way for his inflating ego. Their reward was their very own Frankenstein’s monster decamping to set up his own firm, taking most of the clients with him. He somehow even managed to broker a deal with his ex-employer, such was their thrall, for Swiss Heritage to continue to distribute and service his funds around the world!
And, unluckily for yours truly, that deal has survived the merger with my firm, the now-defunct Integrity Asset Management. So I had the pleasure of hosting a lunchtime seminar with the one, the first, and thankfully the only, Troy Sexhammer.
Most of you will have heard of this guy. Born on third base into a wealthy west-coast family, he graduated law summa cum laude from Yale, having already established his charitable organisation, Zenergy, with the intention of providing electricity to the world’s poorest. Astute readers will recall him turning down the NFL draft to go work on Wall Street alongside legendary investor (and close family friend) Arnie Zondermann. The old boy died at his desk only a few years later and Swiss Heritage somehow then secured Sexhammer’s signature to lead their nascent global equity business. He was still just 28 years old.
All the while, his annual charity parties were the hottest ticket in LA, with Hollywood and Wall Street mingling self-appreciatively, each keen to outbid the other for Sexhammer’s latest photography portfolios, often of the world’s top supermodels. You may have seen him in the celebrity magazines with his new wife, Scandinavian movie starlet Riita Jansen. Yes, most of you will have heard of this guy. By now, all of you will hate him.
The rest is history – he left Swiss Heritage after a few years and turned Zenergy into a hedge fund, now managing some $24 billion at fees of 2.5% and 24% of absolute performance! Do the math: he made nearly $2 billion in fees last year! The world’s poor, when I last checked, aren’t all running 220 volts a/c yet.
That’s not exactly the overview I just gave when introducing him to our audience of private bankers, consultants, fund selectors and finance chiefs. Designed as an intimate ‘Dialogue With’ type of event, dear diary, we are now sitting at a long table, with Troy holding court at the top.
He straps on the radio-mic, and fiddles with his iPad. Somehow he gets it to project a presentation onto the ceiling of the room. A few more finger-swishes and he seems to have hacked into the hotel’s PA system, and rock music blares out from all around to accompany the African-landscape videos up above. The bankers are metaphorically reaching for their clients’ cheque-books already! “If he can do this with an iPad, just think what he can do with our money,” they are whispering excitedly to one another.
Sexhammer is off, running very quickly through some very high-level ideas about global markets. He likes technology stocks, he slams utilities (mainly for not giving his charity free electricity), he loves big pharma, and he hates the oil majors.
Subtly, he lowers his voice and declares that FX markets are a mystery to him and he has lost more money there than on anything else. 90% of the attendees scribble this stat down, delighted to find a chink in the armoury, and congratulating themselves for spotting it.
He picks up the pace again and outlines the trades he loves the most. He ends on “I’ve only been selling Apple for four years, but it’s growing so fast I can’t sell it quick enough”, cuing raucous laughter and hearty applause. One girl from SBHC asks him to sign a paper napkin.
Question Time! The first is the same as the first question at all these events I have been to for the past three years: “What’s your view on the RMB?” Oh God, kill me now. No wait, kill yourself for banality and unoriginality beyond belief – the guy has just declared himself an FX novice! Even I was listening to that bit.
As is often the case, the next question comes from someone who really just wants to talk. He drones on about CPI, ECB, OPEC, GOP, CNH and all the rest. Troy realises what’s going on and beckons over the waiter. He’s still mic’d up so we all hear the world’s best-ever order: “Chicken?!? No way, dude. Mine’s a steak. Rare. Yeah. Kick its ass, wipe its nose and plate that baby up for me. Perfect. And a Coke Zero.” For the first time today, I feel some admiration for the guy.
My admiration is doubled when he finally gets a chance to answer the question. Troy stares at the verbose banker for five seconds (it feels like 10 minutes) before saying, “To answer your question: yes. Next question – keep it short folks, we’re on the clock.”
Within moments, we’re leaving the room, Troy bound for his private jet back to a different life, me back to the office with an autographed photo for my secretary. He slings his arm around my shoulder and I feel part of his world. “You know, buddy”, he begins, “this industry is crazy. I haven’t made an investment call in years, the performance is mediocre at best but those guys are falling over each other to invest in my fund. You and I know how this works – it’s all about the optics. Now go bring in that money, dude.”
It’s hardly Al Pacino in Any Given Sunday, but those few words hit home. We’re the same, Troy Sexhammer and William T. Fitzgerald. We understand what matters in this maelstrom of finance and he has recognised that in me. He has confided in me that he knows it’s all B.S. This is a real defining moment in my career.
Troy looks back at me as he gets into the awaiting limo. “Don’t let me down, David, I’m counting on ya.” I hate that guy.
William T. Fitzgerald is a fictional character, as are all the other individuals and companies in "RFP Diary". Any resemblance to the living or to real firms is purely coincidental. Will's adventures continue fortnightly.