Hey Trader,
Last year, five hedge fund managers took home $800 million to $900 million each. That’s one year of salary and bonus.
I walked through who they are on today’s session. The money grabbed my attention.
Something else held it.
None of them try to do everything.
Stephen Mandel built his name on consumer stocks. Andreas Halvorsen is a financials expert.
Jeffrey Talpins came up trading fixed income options and mortgage-backed securities. Joseph Edelman invests in biotech and healthcare.
Each one picked a lane and stayed in it.
You don’t need their capital to copy that. You need the discipline to trade what you know and leave the rest alone.
I’ve been doing this for 39 years. I still stay away from whole sectors because I know they’re my weak spots.
You can’t be all things to all people. Don’t even try.
So let me show you how these managers turned one lane into a fortune. Then I’ll show you how I pick mine, and how you can find yours.
Five Managers, Five Different Lanes
I’ve been working through last year’s 20 highest-paid hedge fund managers. Pay means base salary plus bonus for one year.
Today I covered five of them. Each one took home $800 million or $900 million.
Here’s where four of them make their money:
- Stephen Mandel, Lone Pine Capital: Consumer stocks. He’s known as one of the best consumer analysts in the business.
- Andreas Halvorsen, Viking Global: Financials. His fund runs long and short.
- Jeffrey Talpins, Element Capital: Fixed income options and mortgage-backed securities. He was head trader of Citigroup’s fixed income options desk.
- Joseph Edelman, Perceptive Advisors: Biotech and healthcare. He hires medical doctors and PhDs for his team.
Chase Coleman at Tiger Global is the fifth. He’s an innovation and IPO investor.
I’m not an IPO guy. He can take that risk.
Mandel, Halvorsen and Coleman all came out of Julian Robertson’s Tiger Management. They learned in the same den.
Then they went in completely different directions.
Why One Lane Pays More Than Ten
Talpins is my favorite example. He’s an expert in mortgage-backed securities and fixed income.
If you know mortgage-backed securities that well, I ask why you’d trade anything else.
He doesn’t. He built billions in one area.
These managers aren’t trying to be something they’re not. They funnel themselves into what they know best.
Then they leverage that knowledge into massive amounts of money.
Trade what you know. Know what you trade.
Halvorsen has a famous line that says the same thing differently. Fundamentals over fads.
Fads can carry you for months or even years. Fundamentals are what last.
How I Stay In My Own Lane
I’m a value guy. Value is my expertise.
I covered stocks on Wall Street for 30 years.
As an analyst, I covered storage REITs and lenders. I still know financials because of it.
I also want a monopoly or an oligopoly. A sector with one, two or three players keeps my stock steady.
If a sector has 10 players, I’m not touching it. Forget about 100.
Here’s what I stay away from, and I’m not shy about it:
- Biotech. I don’t know squat about it, so I avoid it like the plague.
- Boeing and industrials. That’s my weakness. I’m out of that business altogether.
Look at Edelman again. Biotech made him $900 million last year.
It’s the same sector I won’t go near.
His strength is my weakness. That’s fine with me.
Options are another example. I was an options registered principal, and I know a lot.
I still can’t shine Brandon Chapman’s or Blake Young’s shoes when it comes to options. I know that about myself.
How To Find Your Lane
You can’t copy these managers’ capital. You can copy how they think.
Here’s how I’d start:
- List what you already understand. Find a sector you’re good at and knowledgeable about. Play to that strength.
- Cut the sectors where you have no edge. I cut biotech and industrials. You’ll have your own list.
- Study the people winning in your lane. Ask what products and markets they trade. Ask whether they run long, short or market neutral.
I’m not telling you to be jealous of an $800 million paycheck. I’m telling you to dig into how it got built.
Then put your own stamp on it.
My lane is buying stocks that are stupid cheap. I buy names you’d never touch because the chart looks ugly.
That’s how I’ve made a killing for my Genesis COG members.
I bought one on Friday. It broke out today.
The Genesis COG System gives you the complete methodology behind that lane. It shows you how I find value nobody else is looking at.
The Genesis Cog Scanner adds real-time signals on top. Together, they keep you trading what you know.
Join the Genesis COG System Today
Professor Jeffrey Bierman
Creator of the Genesis COG System
