Lahde Capital Management Has Now Closed Its Doors

Andrew Lahde released a letter to his shareholders this week that has everyone in the hedge fund industry talking.

Andrew Lahde runs (or used to run) Lahde Capital Management, a small hedge fund that is based out of California. Lahde apparently started the fund with $10 million dollars a few years ago after working for Dalton Investments LLC.

Lahde rose to prominence last year when his hedge fund posted a one-year gain of 870%. This translated into a massive gain for both Lahde and his investors - if Lahde's fund had a standard 20% performance fee, then Lahde would have banked somewhere in the neighborhood of $17.4 million dollars last year. This, no doubt, inspired Lahde to say sayonora to the industry. However, it is the manner in which Lahde left that has everyone talking.

In his final letter to the investors in his fund, Lahde thanked "stupid" traders for making him rich. Lahde went on to say that he was "in this game for money" and that the "low-hanging fruit" was there for the taking. He went on to say that the people who were "truly not worth of the education that they received" rose to the tops of companies such as "AIG, Bear Stearns, Lehman Brothers and all levels of our government." He also said that the banks on the other side of his trades were just too risky to do with, pointing out that this was one of the main reasons that he was leaving the hedge fund game.

Lahde goes on to say that he will spend his time "repairing his health", and that a lifetime of trying to gain placement in prestigious schools, graduate schools and jobs had left him broken and seeking more.

Lahde then closes the letter by extolling the virtues of hemp, and wonders why marijuana is illegal when drugs such as Paxil, Zoloft and Xanax are legal.

Lahde Capital made its spectacular 870% profit in 2007 by betting against US subprime home loans. After making a pile of money for himself and his investors, Lahde announced (at the time) that he would be putting most of the profits into gold and other precious metals.

I would imagine that many people outside of the hedge fund industry found this letter particularly amusing, especially given the negative view that many have towards the industry (and especially, hedge fund managers).

I can't imagine that the letter went over too well with Lahde's fellow hedge fund managers. I can't imagine that the eight-figure Lahde cares too much at this point though.

Source: Andrew Lahde's Letter to Investors

Filed under: Hedge Fund News | Trader Profiles | General Market News

1 COMMENT - What Say You?

Comment by Tom on October 18, 2008 @ 4:03 am

My favourite part of the letter is when he says "Meanwhile, their lives suck." Awesome.
I think he rambles a bit toward the end, and I think that his statements about hemp, while parfor the course, are somewhat misleading in that he implies it's a source of clean energy.
In short, though, truly awesome. I think this guy is who everyone says they're going to be on the way in... and no-one ends up as on the way out.

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