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College, SUNY-Stony Brook, Yeshiva University, and the University of the South. Other significant parts of the investor base are high-net-worth individuals and fund of funds entities.

On the issue of transparency, Kingdon says the firm provides weekly performance data, quarterly data outlining performance by region and asset class, as well as month-end summaries of invested positions and quarterly SEC filings on long positions.

Kingdon tells investors that they must find a manager with a style that works for them. "If you like a roller-coaster ride, go to a highly leveraged fund. If you like low volatility, look for a more value-oriented, less leveraged fund."

DEFINING MOMENTS

Kingdon started his firm in 1983 with $2 million in assets. He recalls that during the first six years of being in business, his philosophy was to make as much money as possible any way you can. His returns averaged about 35 percent per year. Performance was strong but there was considerable volatility. After five years, his assets had increased from $2 million to only $8 million.

He realized that he could only justify charging investors an incentive fee for low-volatility, consistent performance, and avoiding big swings. He abandoned the risky path for consistent performance, providing above-average returns with below-average risk. The investment objective became one of maximizing risk-adjusted total return.

In 1988, he realized there was no need to be fully invested unless he was very bullish on the markets (which was rare). By 1989, he had achieved global diversification and had a different attitude; a Zen element appeared. "Happiness ensues when it is not pursued—investing is the same thing. Success occurs when you are willing to wait for opportunities." He quoted pro basketball player Al Houston of the New York Knicks—"'Let the game come to you.' There are always opportunities—long, short, or arbitrage."

The year 1990 was Kingdon's most painful one, after big up years in 1988 and 1989. In 1990, Kingdon was bearish; the Fed tightened the money supply, and the market looked expensive to Kingdon. He was mostly in cash, only 1 percent invested. He was sitting still, waiting. "Sitting still is the hardest thing to do. As Pascal wrote, 'The hardest