Free The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds by Maneet Ahuja Page B

fund. “Our whole philosophy of how to invest was based on getting people with different backgrounds and different views to work together so we can see something that someone else is not seeing,” he says. Few philosophies are ever practiced so perfectly. By the time of the merger, GLG had recruited a roster of elite traders from big investment banks, and built a roster of multistrategy funds with more than $30 billion under management.
     
    As Lagrange sees it, “Man was very intelligent in looking for an active asset management business for company managed or existing products. Man had tried and failed to do this, so finding GLG, which actually needs distribution, was the perfect fit.” In the same way, GLG, which had tried and failed to build a strong business presence in the United States, benefits from Man’s expertise. “When we get that working,” Lagrange says, “that should be a killer.”
     
    Lagrange says Man understands and respects his business: “They really understand what it takes to build what we’ve got. We both want exactly the same thing.” As opposed to other acquiring companies, Man adopted the view that it would select the people best-equipped to bring the business forward, no matter where they come from. “It’s very brave to do that,” says Lagrange, who adds that he is one of those affected. “There are many of people here who are running more money than I do, and that’s as it should be. They’re better at what they do than I will ever be.”
     
    Lagrange believes the merger has freed GLG’s fund managers to focus on managing money. “We are good at investment management,” he says, “but we are perhaps not the best people at running a business, and we haven’t focused enough on distribution. To do so would have taken up a great deal of capital.”
     
    Lagrange himself is an example of the new arrangement. Although he sits on Man’s executive committee, he is there to give his views, and not to run the business, which frees him to manage his $2 billion fund centered on European strategies. With its energies properly focused, GLG, which had been described as “a collection of 40 relatively small funds that are closed when they reach capacity,” could, as part of the Man Group, have $50 billion under management within the next few years. “It’s really working,” says Lagrange.
     
    GLG built its reputation by fostering “a star culture,” one that attracted the very best proprietary traders from leading investment banks by offering them the freedom to follow their own strategies. “There’s a lot of different ways to get to the right answer,” Lagrange says. “We have a lot of people who are really smart. We don’t want to normalize their processes; we want to normalize the output. It doesn’t really matter how they arrive at the right output.”
     
    But having a star system doesn’t mean that teamwork and process are forgotten concepts. Lagrange stresses that while autonomy is initially attractive, the deeper opportunity GLG offers a trader is to work with other elites of proven stature. Somehow, being a superstar among superstars undercuts the internecine competition. “The ability for people to take from and give to other people is massive,” says Lagrange. Once this spirit is recognized, everything becomes much easier. “People share resources, as opposed to fighting for resources,” Lagrange says. “We try to support the strengths of our managers and compensate for their weaknesses. What they are not really good at gets done by somebody else. Because it’s all about a return on capital employed. We manage the people here based on return on human capital.”
     
    Process is also hugely important. Although portfolio managers have a lot of latitude, their results are subjected to two systems of review. First, GLG spends time analyzing companies, asking questions, and challenging managers on their convictions. When you do that, Lagrange says, “You can