How Did John Thaler Do It?
Considering Bloomberg reports that “hedge funds on average dropped 0.9 percent in the year’s first nine months and long-short managers posted losses of 2.6 percent,” Thaler’s performance is extraordinary. Several people familiar with the matter explained that Thaler’s neutral stance and short positions drove the above-average returns. Apparently, the fund manager had a variety of short positions, so he was able to turn a profit when those stocks fell and offset any losses his fund incurred owing to his long positions. In other words, Thaler seeks to avoid huge fluctuations in his JAT Capital Management’s portfolio by betting “on both sides of the book.”
Who is John Thaler?
John Thaler is only 36. He received a BS in economics at the University of Chicago and went straight into working as an analyst at Merrill Lynch & Co., and later as an associate at Spectrum Equity Investors LP. Thaler went on to join Chris Shumway’s Shumway Capital Partners LLC when Shumway started the group in 2002. Here, Thaler worked as an analyst in telecommunications, media and technology, eventually progressing to manage the SCP Omni Fund. He left in 2007 to start his own hedge fund. In November that year, he founded JAT Capital Management. Thaler started the fund with over $220 million in assets, including some start-up capital from Shumway.