One of the unique features of the Virginia undergrad program in Engineering is the requirement that every student must write a thesis to graduate. The school then archives all of the papers in the library. Mine, (titled “Recombinant Adenovirus Mediated A1-Adenosine Receptor Over-Expression in the Mouse Myocardium to Treat and Prevent Myocardial Infarction”), was written over the course of about 4 straight sleepless nights in the Spring of 2000.
I was preparing for another class in Security Analysis, and the upcoming speaker was Lee Ainslie, portfolio manager of $10B+ Maverick Capital, and Virginia Engineering alum. I thought it would be interesting to read his thesis before the class, and I descended into one of those libraries that seem to have endless underground floors of dimly lit metal book racks. I finally found his thesis, and to my amusement it was printed on the old school printer paper with perforated edges that you tear off. I don’t remember the title, or the subject, but I do remember the grade. Lets just say the axiom that A+ students don’t become CEOs (and vice versa for C students) applies here. . .
Ainslie is obviously a brilliant hedge fund manager, and has built a sustainable fund operating since 1993 with no down years. Here is an interview with Ainslie in CFO magazine, and he is also profiled in the book New Investment Superstars. There was also a cover story on Maverick about 3 years ago in Worth magazine, but I can’t seem to find any links. . .
In a recent interview with McKinsey Quarterly, Ainslie said “Maverick is more of a traditional hedged fund, investing only in equities and maintaining a balance of long and short positions.” Maverick’s investment team generates performance by understanding which stocks will be the best and worst performers in each sector and region, rather than by trying to time market movements. Ainslie also noted that Maverick “uses many different valuation methodologies, but the most common is to compare sustainable free cash flow to enterprise value.” The fund looks to hold stocks on average between 1 and 3 years.
What is Maverick currently holding? The picks are below and you can track them on Stockpickr here: