Maverick Capital was formed in 1993 when Sam Wyly hired Lee Ainslie away from Julian Robertson’s Tiger Management. Two years later, Ainslie was running Maverick's entire portfolio and in January 1997 he bought out a majority interest in the firm. As in the style of Tiger, Maverick is a long/short equity fund based strictly on fundamental analysis. Ainslie’s “goal is to know more about every one of the companies in which we invest than any noninsider does.” As he learned from Robertson, one of his favorite metrics is comparing enterprise value to sustainable free cash flow. While Ainslie is the leader and face of the firm, he views his management team as peers and values the team culture at Maverick.
Ainslie graduated from the University of Virginia with a degree in systems engineering. After working at KPMG as a consultant, he attended the University of North Carolina business school, where he met Robertson. While working at Tiger, Ainslie was in the technology group where he shaped his investment style and strategy. Just like his mentor, Julian Robertson, he tests his conviction by gauging whether the name is a buy or a sell; there is no such thing as a hold. “Either this security deserves incremental capital at the current price point or it doesn’t – in which case, let’s sell it and put the money to work in a security that deserves that incremental capital.”
While Maverick picks both long and short positions, Ainslie has been clear that they do not "pair trade". The fund is a true hedge fund and they have an equal allocation of longs and shorts in every region and industry. The allocation across sector and region is a large part of their risk management. Even though they are a worldwide fund, the US is always the largest portion due to familiarity by the managers, liquidity, and ease of shorting stocks. They typically hold less than five positions per analyst but also keep each position under 5-8% of the fund. The stocks they invest in have daily volume greater than $10M and due to this they can liquidate more than 70% of the portfolio within one week.
There are six sectors covered at Maverick: consumer, health care, cyclical, retail, financial, and technology. Each team typically has around 7 analysts. Within the firm there are six main funds: Maverick Fund, Maverick Levered, Maverick Neutral, Maverick Neutral Levered, Maverick Long, and Maverick Long Enhanced.\ For 2008 the Maverick Fund finished -26.2% for the year and 14.3% since 1995.
Maverick Linkfest
- Shareholder letters [hedgefundletters.com]
- Pensions and investments profile: June 11, 2007
- Interview with CFO magazine: October 1, 2006
- How Lee Ainslie Does It: Investment News February 11, 2008
- Hedge Fund Performance 2008 – with David Faber, CNBC
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