2007-07-09 16:54:16
Cramer Berkowitz: The Hedge Fund That Launched Jim Cramer Into Super-Stardom
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You can say what you want about Jim Cramer, and you will probably be right.
He's brash. He's arrogant. He can be obnoxious.
But there is one thing that you can not deny. The man has an insatiable thirst for the stock market that translated into millions of dollars for himself and everyone invested in his fund.
Over the fifteen years that Cramer and his partner, Jeff Berkowitz, managed Cramer Berkowitz, the fund returned 24% per year to its shareholders. This is particularly impressive when you consider that these returns are after fees (Cramer Berkowitz took the standard 20% cut of profits and 1% annual management fee.)
Cramer was the driving force behind the success of the hedge fund. He had a near encyclopedic knowledge of the stock market that allowed him to participate in nearly every news-driven event. If any company reported their earnings, Cramer would be able to tell you within a second whether or not that number was good. Through his dealings with the brokers that filled his trades and associations with CEO's and others in the industry, Cramer was able to assemble a network of contacts that allowed him to get information pretty much before anyone else. Cramer would know about an upgrade or downgrade before the investing public, and that gave his fund a pretty big edge. If you were a major broker on Wall Street and you just upgraded a stock, and Cramer's funds did millions of dollars in commissions per year through you, wouldn't you want him to know about your upgrade first before anyone else? This is how it worked.
Cramer was a notorious workaholic, getting 3 hours of sleep per night and getting his work day started at 3 am (on the East coast.) Cramer would do some work at this hour, then work out, then read an estimated 26 newspapers on the way to work in New York, and then put in a full day, working many hours before and after the market closed.
Cramer realized in 2000 that the work hours were putting a stress on his body and his relationship with his family. Somewhere during 2001, Cramer realized that he had all of the money in the world but was still freaking out about the daily fluctuations in the stock market. One particularly bad experience revolving around Brocade earnings caused him to flip his lid one last time, and realize that he needed to step away from the hedge fund game and just concentrate on thestreet.com, which would be a much less stresser environment.
He handed over the reins of Cramer Berkowitz to Jeff Berkowitz at the end of 2001, with the funds total assets totalling over $400 million dollars. He had endured a lot during the run of the fund; multiple SEC investigations, a near liquidation of his fund in the late 90's, and multiple disgruntled employees would couldn't handle Cramer's frantic style.
When the dust cleared though, Cramer had made many millions for himself and his investors, and had raised his profile to be one of the most recognized and well-known stock traders in the world. Love him or hate him, the Cramer Berkowitz era was a very lucrative time for Mr. Cramer.
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Filed under: Trader Profiles
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COMMENTS
Comment by Joe De Lede on August 18, 2009 @ 2:39 am
I've just finished Mr Cramer's 'Confessions' ... the man is a great trader, an even better writer; & to trump that a brilliant educator re. the business of hustling stocks
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Comment by George Stevens on March 13, 2009 @ 2:40 pm
Finally, the other side of the story.
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