I recently read Money Mavericks by Lars Kroijer, a former (Danish) hedge fund manager. Stepping a little back from the action in financial markets and economics for a moment, I thought I’d share my impressions with you. This is something we’re going to do whenever we read something great in book format.

The book is the story of how Lars started his hedge fund, Holte Capital, his career, all the troubles, and the successes. Where the book stands out from the other hedge fund books is that it’s actually quite funny. From the beginning, one gets the sense of how it is to start a hedge fund, and that it is not the quick journey to becoming a millionaire.

Lars went to high school in Denmark, but moved to Boston where he got into Harvard (after a stint at University of Mass.). After that, he went to work for two years as an Analyst at Lazard, which is a boutique investment bank. He writes that they had an excel document where they kept track of when they were done with the position (an Analyst position is typically around 2 years) with more than two decimals so that something happened every day. A work week of 100 hours is apparently not that great. After Lazard, he went back to Harvard Business School to get a MBA, and from then on the hedge fund career started. He worked at SC Fundamental and HBK Investments before quitting to start Holte Capital.

Now, setting up your own hedge fund is not easy. Without some serious start-up capital, its not possible. To see why, here is a picture of the structure from the book:

In the book, he estimates the legal and start up fees to be $250.000, and that’s at the stage when one doesn’t know if the fund is ever going to get investors. That’s risk.

What makes the book worth reading is the honesty and small stories from the start up phase. One really gets how hard it is to get through, but it is actually all the small flaws and mistakes that make Lars come out as a great fund manager that really cares for his investors. One of the great chapters is Chapter 12, “A Day In The Life Of” where he depicts a random day running a hedge fund, and the ups and downs during a day. Psychology has a lot to say, and that becomes clear when one reads how his P&L goes up and down and the urge to check it every minute.

All the small stories, of how he escaped to the gym during his time at Lazard, or how he wanted to look busy at a fundraiser in France with a lot of other fund managers, make the book worth reading, and you really feel the pain of the downs and the glory of the ups.

The final chapters examine hedge funds and their role. I can easily see some of the points, and maybe I’ll be better able to understand some of them as I grow older. The entrepreneurial part — which is a theme throughout the book — is something I can relate to more easily, though.

It’s a fun and easy read — definitely recommended if one wants to know how it is to start and run a hedge fund — with all the ups and downs it brings along.