Hedge funds have been getting a lot of negative press due to their mediocre performance but one hedge fund has quietly been blowing the doors off the industry. The Marlin Fund run by Michael Masters, who was once profiled in the book Stock Market Wizards, has quietly averaged 42% a year annualized since 1995. Even more incredible in 2012 he more than doubled the S&P 500’s return with a 39% return and in 2013 he returned an incredible 100%.
Let me repeat that Michael Masters of the Marlin Fund returned 100% last year.
Master’s investing style is very similar to ours at The Billionaires Portfolio he trades stocks and options based on catalysts. He does not look at a company’s earnings or cash flow, all he cares is about is whether there is a catalyst present that will push the stock higher in the short term. Secondly Masters also looks at what sectors and markets the top investors and hedge funds are investing in follows them, something we do everyday at the billionairesportfolio.com
Master’s also is one of the biggest options traders on the street, and he is a buyer of options not a seller, he buys call options on stocks that he thinks will move up because of a catalyst and because of the leverage in options he has put up some of the best performance numbers in the industry.
But the coolest thing about Michael Masters is that he is a 100% self made man. Masters never worked on Wall Street, or went to an Ivy League School, he does not have an MBA or even a graduate degree, he is just a “regular guy” from Marietta, Georgia who graduated from the University of Tennessee and started off his career selling door to door literally as a full commission stock broker.
Yet Masters was confident in his stock picking ability and ad tired of the sales grind of the brokerage business and started his own hedge fund at the incredible ripe age of 27.
Masters pooled together money from friends and family about $200,000 and launched his hedge fund in 1995, without any experience, and the rest as they say is history.
What this should tell you is a couple of things: first performance is everything, if you can perform the money will come, no matter who you are or where you came from.
Secondly persistence and the ability to stick to your “guns” even when things are not going your way is the key to success. Masters had a very tough time between 2000-2003 as his investment style of trading stocks and options on catalysts underperformed the market and his assets shrunk from over a Billion to just $200 million.
After that Masters decided he was not going to let investors or people dictate his life, he basically stopped trying to raise money and just decided to let his performance do the talking and never deviated from his investment style of buying stocks on catalysts.
But after putting up two huge back to back years in 2012 and 2013 Masters didn’t have to try and raise money it just came pouring in, especially after putting up a 100% gross annualized return in 2013. Now Masters manages well over $2 Billion dollars and has become one of the highest paid hedge fund managers on the street.