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Maverick Capital is a hedge fund located in GuruFocus’s own Dallas metroplex. Led by Lee Ainslie, this fund has been in operation since its inception in 1993. Lee Ainslie earned his bachelor’s degree in system engineering from The University of Virginia, and his MBA from the University of North Carolina. Ainslie was recruited at UNC to work for legendary hedge fund manager Julian Robertson in 1990. In addition to his hedge fund duties, Ainslie serves as the vice-chairman of the Robin Hood Foundation, and on the board of trustees for several organizations such as the Green Vale School.
“I was deciding whether to return to management consulting (my first career) or to go into investment banking; Julian gave me an opportunity to come to New York to work for Tiger”
Lee Ainslie worked for Julian Robertson’s Tiger Management, one of the earliest hedge funds to be founded. Utilizing a value-oriented approach to investments, his success launched the explosion of the hedge fund industry. As referenced in a previous article (http://www.gurufocus.com/news.php?id=126342), many of these analysts would go on to launch their own hedge funds after training and tutorage from Robertson. These new fund managers became a generation known as “tiger-cubs”, so eloquently referring to the roots of their training. Ainslie served as a managing director for Tiger Management and as a technological analyst for 3 years.
“….Evaluating management teams (of companies you were considering investing in) is critically important.”
Maverick Capital at its very core is a long/short equities fund. They invest in companies utilizing a fundamental bottoms-up approach to analyze equities. Ainslie operates with a long term view on value, much like his mentor, and this can be seen in their capital funding requirement. For the most part, his fund is widely closed to most investors, as he prefers dedicated and sophisticated investors. They prefer capital from investors with ties and influence on corporate boards across several spectrums of industry, in order to maintain and grow their business network. Furthermore, he typically has investors commit to a three year period, in order to achieve long term maximum value. Each position comprises no more then 5-8% of the overall portfolio, and is analyzed not upon quarterly earnings, but on a large annualized view with an optimal investment holding of 1-3 years out.
In terms of shorting equities, Lee Ainslie stated that: “Our short exposure is achieved by shorting individual stocks, which I think is increasingly unusual these days. But to us, it’s critical, because we want to add value on both the long side and the short side. If you use market-related indexes to create your short exposure, by definition it’s not going to add value.”
In terms of performance, Maverick Capital returned 11.2% vs. the S&P benchmark of 15.1% in 2010. Much of this loss was attributed to their short holdings, as is stated in their 2010 shareholder letter (http://neoalpha.blogspot.com/2011/02/maverick-capital-2010-annual-letter.html), “nine of our ten largest losses on the year were in short investments”. Since 1995 however, Maverick Capital had an annualized return of 14% vs. the S&P 8.1%.
Maverick Capital’s portfolio composition for the two most recent quarters of 2010 is shown in the following table. Comparatively speaking, Lee Ainslie increased his holdings in technology and financials by 3.40% and 3.90% respectively. Furthermore, he initiated a minor position in the basic materials sector. Conversely, he reduced his holdings in consumer services, health care, consumer goods, and industrials by a relatively modest amount.
MATTHEWS PACIFIC TIGER FUND, ASIA
INSIDER, INSIDER BUYS
MEDIA,CABLE,DISCOVERY,TELEVISION,TLC,ANIMAL PLANET,VELOCITY,OPRAH WINFREY,OWN,THE HUB,SBS NORDIC,PROSIEBEN
LONG, LIFE INSURANCE
LONG, US BANKS
BEER, BREWERIES, HEINEKEN, EMERGING MARKETS, PREMIUM BEER
PAY TV, SEMICONDUCTORS, DIVERSIFIED INDUSTRIALS, RESORTS & CASINOS, SPECIALTY RETAIL