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fund with the hottest hand, can be extremely stable. Such funds are dependent on managers like ourselves to provide consistency. Thus these funds tend to make us a core part of their portfolios."

Stark disclosed that he is selective with his client base and is not hesitant to turn potential investors away. He wants investors who have stable, long-term capital and who understand arbitrage. "The greatest risk in arbitrage is if capital leaves at the wrong time. You are attempting to exploit temporary mispricings between one security and another. Much of your success comes when the correct relationship between those securities is restored. When the relationship is out of whack and your capital leaves is when you get hurt."

About 95 percent of his and Roth's net worth are in the funds. The general partners and staff members' investment in the funds are about 8.3 percent of the total assets.

On the issue of transparency, Stark says that with arbitrage a manager can be harmed if people know about individual trades. Stark provides information on leverage and the geographic distribution of positions. Beyond that, if investors want specific information about particular positions, Stark requires that a confidentiality agreement be signed. He also will permit on-site reviews of the portfolio.

Stark and Roth are always available to talk with investors. While they have three people in marketing and client services, the two principals will always take investor calls.

WORK AND HOBBY CLOSELY INTERCONNECTED

Stark admits that he no longer comes to the office of weekends. Whatever free time he has is devoted to his wife, their two children, charitable board work,