Fundamental Technologies I Limited Partnership - Hedge Fund
General Partner and Fund Manager 1996 to 2000
FTI was BC's first hedge fund. My securities lawyer, Paul MacNeill, had a big challenge getting it approved by the BC Securities Commission because they had never seen one before. After I sold the company I started in grad school, I wanted to invest some of my liquid assets short against the tech market. My thinking was that my portfolio would always be over-weight illiquid tech stocks. The ideal portfolio strategy was to offset that with short exposure to the tech market.
I worked on some of the investments in FTI with the legendary Bob Disbrow. He taught me a lot about investing on the short side. It was tremendous fun and FTI performed very well; but I learned why so few funds invest short - it is much more work than going long. The entire market structure and psychology is biased toward the upside. Going short requires dogged determination, nerves of steel and lots of capital for margin calls and short squeezes. Borrowing stock to short was also becoming harder and harder. As much fun as it was, I decided there were much easier ways to invest.
FTI was about 60% short for the first three years. Shortly after I decided to go 100% long, the market became extremely overvalued and I couldn't find anything to invest in at prices that made sense to me. I thought about reconsidering my strategy and going short again, but decided against it because I was stunned by the upside momentum in 1998 and 1999. Anyone going short against a trend like that would probably have gotten killed before being proven right.
It was a frustrating time because I couldn't go short and I couldn't go long. The markets just didn't make any sense to me, so I went entirely to cash and waited to see what would happen.
Note: These results were prepared by an external accountant but not audited.