Interesting ‘goodbye’ letter by a hedge fund manager

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    Interesting ‘goodbye’ letter by a hedge fund manager

    Post by Sabastian on Fri Mar 27, 2009 12:22 am

    Interesting ‘goodbye’ letter by a hedge fund manager who closed down his 1 year old fund after returning 866% - I think this is atleast 6 months old…

    Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into

    the spotlight last year after his one-year-old fund returned 866 percent betting

    against the subprime collapse.

    Last month, he did the unthinkable -- he shut things down, claiming dealing with

    his bank counterparties had become too risky. Today, Lahde passed along his

    "goodbye" letter, a rollicking missive on everything from greed to economic

    philosophy. Enjoy.


    Today I write not to gloat. Given the pain that nearly everyone is experiencing,

    that would be entirely inappropriate. Nor am I writing to make further

    predictions, as most of my forecasts in previous letters have unfolded or are in

    the process of unfolding. Instead, I am writing to say goodbye.

    Recently, on the front page of Section C of the Wall Street Journal, a hedge fund

    manager who was also closing up shop (a $300 million fund), was quoted as saying,

    "What I have learned about the hedge fund business is that I hate it." I could not

    agree more with that statement. I was in this game for the money. The low hanging

    fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard

    MBA, was there for the taking. These people who were (often) truly not worthy of

    the education they received (or supposedly received) rose to the top of companies

    such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.

    All of this behavior supporting the Aristocracy, only ended up making it easier

    for me to find people stupid enough to take the other side of my trades. God bless


    There are far too many people for me to sincerely thank for my success. However, I

    do not want to sound like a Hollywood actor accepting an award. The money was

    reward enough. Furthermore, the endless list those deserving thanks know who they


    I will no longer manage money for other people or institutions. I have enough of

    my own wealth to manage. Some people, who think they have arrived at a reasonable

    estimate of my net worth, might be surprised that I would call it quits with such

    a small war chest. That is fine; I am content with my rewards. Moreover, I will

    let others try to amass nine, ten or eleven figure net worths. Meanwhile, their

    lives suck. Appointments back to back, booked solid for the next three months,

    they look forward to their two week vacation in January during which they will

    likely be glued to their Blackberries or other such devices. What is the point?

    They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and

    Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly

    everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry

    away and enjoy life. So this is it. With all due respect, I am dropping out.

    Please do not expect any type of reply to emails or voicemails within normal time

    frames or at all. Andy Springer and his company will be handling the dissolution

    of the fund. And don't worry about my employees, they were always employed by Mr.

    Springer's company and only one (who has been well-rewarded) will lose his job.

    I have no interest in any deals in which anyone would like me to participate. I

    truly do not have a strong opinion about any market right now, other than to say

    that things will continue to get worse for some time, probably years. I am content

    sitting on the sidelines and waiting. After all, sitting and waiting is how we

    made money from the subprime debacle. I now have time to repair my health, which

    was destroyed by the stress I layered onto myself over the past two years, as well

    as my entire life -- where I had to compete for spaces in universities and

    graduate schools, jobs and assets under management -- with those who had all the

    advantages (rich parents) that I did not. May meritocracy be part of a new form of

    government, which needs to be established.

    On the issue of the U.S. Government, I would like to make a modest proposal.

    First, I point out the obvious flaws, whereby legislation was repeatedly brought

    forth to Congress over the past eight years, which would have reigned in the

    predatory lending practices of now mostly defunct institutions. These institutions

    regularly filled the coffers of both parties in return for voting down all of this

    legislation designed to protect the common citizen. This is an outrage, yet no one

    seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I

    would argue that there has been a dearth of worthy philosophers in this country,

    at least ones focused on improving government. Capitalism worked for two hundred

    years, but times change, and systems become corrupt. George Soros, a man of

    staggering wealth, has stated that he would like to be remembered as a

    philosopher. My suggestion is that this great man start and sponsor a forum for

    great minds to come together to create a new system of government that truly

    represents the common man's interest, while at the same time creating rewards

    great enough to attract the best and brightest minds to serve in government roles

    without having to rely on corruption to further their interests or lifestyles.

    This forum could be similar to the one used to create the operating system, Linux,

    which competes with Microsoft's near monopoly. I believe there is an answer, but

    for now the system is clearly broken.

    Lastly, while I still have an audience, I would like to bring attention to an

    alternative food and energy source. You won't see it included in BP's, "Feel good.

    We are working on sustainable solutions," television commercials, nor is it

    mentioned in ADM's similar commercials. But hemp has been used for at least 5,000

    years for cloth and food, as well as just about everything that is produced from

    petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant

    and it grows like a weed, hence the slang term. The original American flag was

    made of hemp fiber and our Constitution was printed on paper made of hemp. It was

    used as recently as World War II by the U.S. Government, and then promptly made

    illegal after the war was won. At a time when rhetoric is flying about becoming

    more self-sufficient in terms of energy, why is it illegal to grow this plant in

    this country? Ah, the female. The evil female plant -- marijuana. It gets you

    high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does

    not result in bar fights or wife beating. So, why is this innocuous plant illegal?

    Is it a gateway drug? No, that would be alcohol, which is so heavily advertised

    in this country. My only conclusion as to why it is illegal, is that Corporate

    America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other

    additive drugs, than allow you to grow a plant in your home without some of the

    profits going into their coffers. This policy is ludicrous. It has surely

    contributed to our dependency on foreign energy sources. Our policies have other

    countries literally laughing at our stupidity, most notably Canada, as well as

    several European nations (both Eastern and Western). You would not know this by

    paying attention to U.S. media sources though, as they tend not to elaborate on

    who is laughing at the United States this week. Please people, let's stop the

    rhetoric and start thinking about how we can truly become self-sufficient.

    With that I say good-bye and good luck.

    All the best,

    - Andrew Lahde

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