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Whiz Kid Trader
Running Hedge Fund from St. Pete
A certified Wall Street "Whiz" according to no less an authority that the Wall Street Journal has decided to make the Bay Area his home and base of operations. At 23, Andrew S. Nissenbaum, founder and president of Hypothesis Capital Management Inc., is already a veteran analyst and trader. Now, he's running an offshore hedge fund from his new St. Petersburg office. "I had always been interested in trading things," he recalled. "Growing up, I had baseball card and comic book stands at shows. I always liked the mechanics of trading. While I was a student, I tried buying and selling stocks, but I didn't do very well." A Milwaukee native, Nissenbaum moved to St. Petersburg with his parents during his senior year in high school. He attended the University of Florida for a year, but then he was accepted as a transfer student in the Wharton School of Business at the University of Pennsylvania. It was while attending finance professor Jeremy J. Siegel's class in monetary economics that Nissenbaum experienced his epiphany. On day, Siegel described the "January Effect," a tendency -- widely publicized several years ago -- for small-capitalization stocks to out perform their larger brethren in January. Nissenbaum had the idea that because a lot of investors knew about the phenomenon, they would try to get ahead of the market by buying small-cap stocks early. "I had the idea that the January effect would happen in December that year," he explained. With $2,400 borrowed on a credit card, Nissenbaum played his hunch using a futures spread. When he settled his position three months later, he had quadrupled his investment. He didn't stop there, however, but continued to speculate in stock index futures. By the following summer, he had made enough money to lease a seat on the Chicago Mercantile Exchange and worked over the summer in the Standard & Poor's 500 futures pit. By the time his summer job ended an he returned to Wharton, he had grown his original $2,400 investment to $300,000. That performance won him write-ups in the Wall Street Journal, The Financial Times and other publications around the world. It also won him a part-time job with Union Bank of Switzerland's New York office, where he traded foreign currencies. Eventually, after graduating from Wharton, Nissenbaum drew the attention of Stanley F. Druckenmiller. Druckenmiller is managing director and chief investment strategist of Soros Fund Management Inc., chaired by legendary international investor George Soros. Druckenmiller hired Nissenbaum on a pert-time, "experimental" basis, and put him to work looking for trading opportunities based on macroeconomic trends. After leaving Soros, Nissenbaum started his own hedge fund in July with an initial capitalization of $6 million. After a slightly shaky start, he said, the fund has posted double-digit percentage gains for each of the last three months and, overall, has outperformed the market. Most of his trades have involved foreign currencies, with a few others in precious metals. The current global economic environment offers a myriad of profit opportunites, Nissenbaum suggested. "I feel very strongly that the east Asian stock market is a major buy, the buy of a lifetime," he said. "They're near a bottom or have already bottomed. I'm very bullish on the Japanese stock market. I think we'll see new all-time highs in the next three to five years." Nissenbaum also believes the price of gold is set to rise substantially. "Gold costs $280 an ounce to produce," he noted. "If the price falls below $280, people will stop producing it. The law of supply and demand comes in. I think gold will be back in the high $300s in a very short time." Until now, Nissenbaum's fund has been open only to non-U.S. residents, but that could change. "I expect the fund to be opened to a limited number of U.S. investors who meet certain expectations I have and that the securities regulators require," he said. Eventually, Nissenbaum suggested, he might be interested in creating an onshore fund for U.S. investors. However, he added, his existing fund is keeping hime plenty busy, as he puts in 20-hour workdays watching market action unfold around the globe. It isn't just the profit-making opportunities that keep him going, Nissenbaum explained. "I love the markets, I love trading and taking risks," he said. "I guess it's an obsession." |
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