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believes macro investing will become less significant as the macro opportunities shrink.

Ainslie says at times there is significant irrationality in the market, which creates prices that don't necessarily reflect fundamentals, and such periods don't usually last long.

No investment committee exists at Maverick. Ainslie points to two dangers: First, consensus thinking becomes the lowest common denominator; in other words, the more interesting and exciting ideas get weeded out. Second, he wants people focused on their individual stocks rather than looking outside their own industry.

LEVERAGE AND RISK MANAGEMENT

Maverick's typical gross leverage is 240 to 250 percent. Daily volatility is about half that of the S&P 500, yet the firm has outperformed the S&P. "We are comfortable with this risk/return profile." Leverage has been consistent over the years. Compared with its hedged equity peers, Ainslie says Maverick's leverage is slightly lower.

While the maximum theoretical leverage Maverick can use is 6 to 1 (i.e., 600 percent), that amount of leverage has never been used. The highest ever was 257 percent. The self-imposed limit is 300 percent.

Ainslie says Maverick can afford more financial risk and still maintain a superior risk/return profile because it has limited so many other types of risk as well, is diversified, and follows strict loss limits. By hedging, Maverick shifts the risk from macro risk to security selection risk. This allows it to add value over time through security selection.

Other managers may get into trouble if they use leverage but are not hedged, are not diversified, are too correlated, or are too concentrated.

Because Maverick is truly hedged, its macro risks are lower. It has a low net exposure within each region and industry in which it invests. It typically maintains fewer than 250 positions and has strict position limits. Therefore, one position cannot be too costly. No long has been greater than 5 percent of net equity, and no short has been greater than 3 percent of net equity. Relatively liquid stocks are traded, so if a mistake is made the position can quickly be exited.