Dealbreaker points to an Institutional Investor story on a 23-year-old financial wunderkind Merritt Graves - who is managing a $4.7m equity long-short fund while nominally attending college in California.
From II’s rather frothy profile of the talented Mr Graves:
In themselves, the numbers put up by Caelum Capital, as Graves’s five-person firm is known, are impressive. For a fund piloted by a kid who has no professional investment training and who only recently moved out of the dorms, they are uncanny. Last year, when the average equity hedge fund manager was down 26.4 percent, according to Chicago-based Hedge Fund Research, Graves was up 40.6 percent. In 2007 he returned 174.1 percent, after more than tripling his money the previous year - and nearly doubling it the year before that.
With obligatory early-challenges-overcome background:
Monitoring the markets while attending class is something that Graves has been doing since junior high school, when he learned formative lessons about risk. At age 14 he convinced his parents to help him open an account at discount brokerage Ameritrade - and twice lost all his savings from odd jobs as the technology bubble collapsed. In 2002, at age 17, he borrowed $7,000 from a local day trader he had befriended and lost it all again.
“It hurt so much worse losing someone else’s money,” recalls Graves.
But Graves was unflappable - according to Institutional Investor, after taking a year off from trading to “study the markets”:
the then-teen summoned the courage to borrow another $7,000 from the same individual, who agreed to give him a shot at making up the prior loss in exchange for half of any additional trading profits.
It proved to be a smart bet. Within a year Graves had turned the $7,000 into $340,000, netting a personal profit of $100,000 after taxes. His winning streak continued as he began studies at the University of Iowa, spent a year abroad at Australian National University and took 12 months off to live in Berkeley, California, to focus on his trading before continuing his education at Pomona. During that three-and-a-half-year period, he turned the $100,000 into $2.8 million, which he used to seed Caelum Capital in October 2007.
Not bad, though Dealbreaker put it best:
Big G is looking grow Caelum’s AUM to $25 million or so over the next year. No promises on how the investment will turn out but for the time being you can probably expect that you’ll probably get a sincere letter of contrition if it turns out badly (”You definitely think about the people you are responsible for and the investors who are counting on you,” says Graves). Here’s hoping he blows up enough to start sending out “I’m not wrong, the markets are wrong” non-apologies and responding to redemption requests with offers of toxic waste. That’s when we’ll know he’s made it big.
