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trimmed. For Sussman, there are no formal written rules, but generally no manager allocation is greater than 5 percent of portfolio capital.

For Ainslie, no sector has more than 20 percent of the portfolio. Net exposure in any one sector is never greater than 10 percent. No long has been greater than 5 percent of net equity, and no short has a been greater than 3 percent of net equity. Cooperman limits the percentage allocated to macro to 5 percent. Och limits the percentage of cash tender offers.

Number of Positions in the Portfolio.

Positions in the portfolios range from an average of about 50 for Tepper and Henry to 2,500-plus for Sussman and thousands for Kovner. Cooperman, Cumberland, and Rajaratnam are clustered in the 90 to 100 position area, while Singer, Kingdon, and Ainslie have about 200 to 250 positions. Stark is in the 400 to 600 range. The greater the number of positions, the less dependent the portfolio is on one position.


Leverage is borrowed money, a factor that influences the rapidity with which changes in market risk, credit risk, or liquidity risk alter the value of a portfolio. The use of leverage varies often depending on trading style. Some of the managers do not use leverage. Rajaratnam and Cumberland do not use leverage. Kingdon hasn't used much leverage in 13 years.

Ainslie uses leverage in the 2.5:1 range. Och uses leverage only in convertible arbitrage of about 3:1. Tepper's leverage is also about 3:1 in low-volatility, safe situations. At the moment, Sussman's leverage overall for the portfolio is 3.5:1. This is much lower than in 1998 when leverage was about 8:1 across the entire portfolio. Since 1996, Cooperman has reduced leverage considerably. Leverage has never exceeded 3.5:1 and has typically been less.

Stark's leverage varies within the 1.5:1 to 7:1 range for arbitrage trades. Leverage is adjusted downward when the macro environment becomes more of a concern or the degree of arbitrage mispricing diminishes. Griffin's self-described leverage is 3:1 to 7:1. Griffin feels comfortable with this because he attempts to mitigate macro risk, and re-

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