Damsel in Distressed: My Life within the Golden Age of Hedge Funds. 2021. Dominique Mielle. Submit Hill Press.
In Damsel in Distressed, Dominique Mielle educates and enchants with a mesmerizing memoir of her life — not solely as a disciplined and consummate monetary skilled but in addition as an distinctive chief amongst hedge fund performers and innovators. None of that’s obvious because the guide begins, when she describes her early years within the business and dazzles the reader with all of the alternatives that in these days represented low-hanging fruit for hedge fund traders. Not solely have been the alternatives thrilling for her; they contrasted dramatically together with her earlier, grueling every day experiences as an funding banker, which impressed her to attend enterprise college at Stanford in hopes of shifting on to raised prospects.
Mielle landed at Canyon Companions, LLC, and thrived there for 20 years, grappling with a plethora of investing challenges — from the wild experience of late 1998 to 2001 to the 2007–2008 world monetary disaster, and past. Her profession parallels the speedy progress in hedge funds, however she provides a particular issue: a eager capability to establish alternative the place nobody else appears to, which emerged after she had served as an analyst in lots of conditions and industries.
Mielle tells vivid tales of research throughout industries and thru a number of bankruptcies that can delight analysts — although most of the firms are gone for good. She honed her monetary creativity by means of relentless evaluation of conditions, together with rigorous threat evaluation, and he or she clearly recognized conditions that have been uncorrelated with any market or rate of interest. Readers can be cheered to study that Canyon administration understood her hypotheses and acknowledged their potential for producing a worthwhile institutional product.
Mielle supplies glorious perspective on the hedge fund business’s evolution. For one, she clearly addresses its emergence and its preliminary “identify” gamers within the early Nineties. Her explanations allow the reader to know how these funds multiplied so quickly (by means of 2008). Hedge funds thrived on market and knowledge inefficiencies. A few of us bear in mind the pre-EDGAR instances that resulted in 1996. Earlier than then, we needed to await firms to disseminate outcomes or filings by way of fax or snail mail, and a few operators invariably acquired these filings earlier than others.
Mielle lays out the adjustments in compliance that challenged the business gamers as time handed, from Regulation FD (truthful disclosure) in 2000 to the 2010 Dodd–Frank Wall Road Reform and Shopper Safety Act, which took impact in 2016. The latter laws affected collateralized mortgage obligation (CLO) constructions by remodeling a low-fee, capital-light CLO enterprise right into a low-fee, capital-intensive one. Mielle labored round this downside by inventing a special-purpose fairness fund that preserved the CLO’s integrity and profitability. Referred to as a capitalized supervisor car (CMV), it retained the fairness of the CLOs issued. The CMV retained a part of the danger, as required by Dodd–Frank, however it was not capitalized with the agency’s personal cash.
The writer addresses one theme repeatedly: The glory days of hedge fund investing have handed. Why? Up till roughly 2008, small, scrappy, nimble hedge funds might file outperformance and distinctive returns, materially exceeding the indices. Success, nevertheless, bred elevated fund measurement, which grew to become the enemy of outperformance. Competitors elevated, enabling traders to press for more-advantageous, performance-based charges. Confronted with narrower revenue margins, the hedge fund business shifted to pursuit of asset progress relatively than return.
The guide accommodates many vivid photos and not using a single web page of images. The primary one that can have many readers howling is the writer’s encounter with Invoice Sharpe. Mielle takes us again to high school days we’d relatively overlook together with her description of the “Sensitive/Feely” Interpersonal Dynamics course at Stanford. Her expertise in Brest, France, is a hoot. Around the globe she went, taking each assembly severely, being meticulously nicely ready, by no means complaining, however subjected to quite a few huge and little humiliations.
Damsel in Distressed excels for a mess of causes. The guide supplies an genuine, firsthand account and relates an extended, rising, uninterrupted profession at a single agency through the interval of quickest progress within the hedge fund business. Its writer is a superb and broad-minded participant who as well as is likely one of the business’s uncommon feminine leaders. She additionally proves to be robust, good humored, and resilient, each in her profession and out of doors of it. I’m “distressed” to learn it for just one cause: It’s the first substantial guide I’ve learn authored by a number one girl in finance since Karen Firestone’s Even the Odds: Wise Danger-Taking in Enterprise, Investing, and Life in 2016.
Should you favored this put up, don’t overlook to subscribe to the Enterprising Investor.
All posts are the opinion of the writer. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially mirror the views of CFA Institute or the writer’s employer.
Skilled Studying for CFA Institute Members
CFA Institute members are empowered to self-determine and self-report skilled studying (PL) credit earned, together with content material on Enterprising Investor. Members can file credit simply utilizing their on-line PL tracker.
