Long/Short Manager Applies Life Experiences To Investment Strategy

Mar 24 2006 | 1:00am ET

By Deirdre Brennan 

Albania is a long way from California, but the journey that Victor Dosti has taken to get to where he is now—a successful portfolio manager for a $40 million hedge fund in Los Angeles—has been far longer and more complex than the 6,000 miles that separate the struggling European nation and the thriving U.S. state.

Two year’s ago, Dosti launched the Whittier Long/Short Fund, which is actually a market neutral product. “The name is a little misleading,” laughed Dosti, who described the fund as a zero-beta, portable alpha product. “You can use this product as an overlay to an index fund and it will consistently deliver positive alpha,” he said.

The fund, which falls under the umbrella of Whittier Trust Company, invests in U.S. publicly traded small-cap companies, with 85% of the portfolio invested in technology firms. Last year, Dosti’s four-member team crossed a milestone, taking in its first investment from an institutional investor, the J. Paul Getty Trust. While Dosti aims to bring in more institutional investors, he isn’t in a rush, preferring instead to focus his energies on delivering steady returns and building up a solid track record.

In an industry that often focuses on increasing assets under management as quickly as possible, Dosti’s patience may have something to do with his background, which is unusual even for the hedge fund industry, which is full of managers with widely diverse pedigrees.

Dosti was born in a concentration camp located 80-miles outside of Tirana in what was then Communist-ruled Albania. “I was there until the Berlin Wall fell,” he said, explaining that the first 20-some-odd years of his life were spent in forced labor alongside other political prisoners.

Dosti’s grandfather was chief justice of the country before the communists took over in the 1950s, making his family a target of the oppressive regime. His parents met and married in the internment camp, where they had three children—Dosti and his two sisters. The whole family was forced to do work in the fields each day, despite the rain or cold, and the children never received a formal education.

“It was work to make you pay for what you believe; it was not to add value to society. It was work to make you suffer,” Dosti said in a hushed voice, as if speaking about it brought back tangible pain.

Despite internment, and political and physical pressure, his family continued to staunchly reject the communist doctrine, paying for their views with decades of lost freedom. Dosti’s parents educated him and his sisters as best as they could, but it was not until he came to the U.S. and enrolled in the University of Southern California that Dosti received any formal schooling. After graduating from USC, he worked in a small money management boutique for a few years before studying business at the University of Chicago.

After receiving his MBA, Dosti went to work for Northern Trust, spending four years doing investment research focused on technology firms before joining Citigroup Asset Management in New York, where he spent another four years running the Smith Barney Small-Cap Growth Opportunities Fund.

Aiming For Slow, Steady Growth

Dosti takes a hands-on approach to researching his investments, learning everything about the companies Whittier buys stock in.

“We invest based on fundamentals and we believe in understanding the product,” he said, adding that he always tours companies and meets with managers, engineers and the sales force before making an investment. “Our objective is long-run. I don’t want to take tons of risk and deliver 30-40% returns the first year. I want to deliver steady returns,” he said.

“If you look at full market cycle, we should be better than the market, but we will not be better than the market in a bull market.” He added that his fund is a great product for institutional and individual investors that are looking to outperform the market over the long-run. “Our biggest value added is stock selection combined with risk control,” he said, something that is very important to risk-adverse, institutional investors.

Dosti, who speaks in modest language about his remarkable personal journey and his accomplishments as a money manager, doesn’t harbor any resentment toward the now-defunct communist regime that oppressed him. And although be may be conservative when it comes to risk management in his portfolio, he views his journey in life as being full of risks.

“I have seen both systems,” he said, referring to communism and capitalism. “That has shaped my personality in terms of adding value, in terms of accomplishing things and in taking risks,” he said, though he added defiantly, “Risks that you want to take.” 

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