Maverick’s Ainslie 'Disappointed, Embarrassed' Over Losses

Nov 13 2008 | 1:59am ET

Hedge funds’ monthly ‘Dear Investor’ letters are quickly becoming case studies in self-pity, self-flagellation and flourishes of apology. The latest missive circulating in cyberspace comes from Maverick Capital, and it’s a dandy.

Maverick managing partner Lee Ainslie told investors in an Oct. 9 letter that he couldn’t find words to describe the firm’s “disappointment, embarrassment and shock” over its horrible results in the third quarter, which spanned every sector and region in which it invested in.

Most notably, the Maverick Levered Fund finished the third quarter down 40.6% (down 34.5% year-to-date) followed by the Neutral Levered Fund’s 27.5% loss last quarter (down 3.3% YTD). The firm’s other hedge fund losses include Maverick Fund Class C 5 yr. (down 22.4% in the quarter, down 16.9% YTD) and Maverick Neutral (14.4% in the quarter, flat YTD).

“Virtually all of the losses of the past quarter were suffered in the month of September,” wrote Ainslie. “This performance was driven by a number of factors—hedge funds deleveraging, short regulations changing, equity markets imploding, prime brokers faltering, hedge funds failing and volatility spiking to name a few.”

Admittedly, Ainslie said as an investor, he finds management teams that blame disappointing performance on environmental factors rather than their own poor decisions “quite frustrating—and in reviewing the above I recognize that I have done just that, and I apologize.”

Going forward, Ainslie offered that Maevrick, which managed $10 billion before the recent losses, is positioning itself to “take advantage of the far more productive environment that will exist on the other side of this nightmare.” In the meantime, he said Maverick has reduced its gross exposure and its median average daily volume of our positions is now only one day—the most liquid Maverick has been in more than eight years.


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