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Memoirs of a Minyan: The Abyss

By

The purpose of the journey is the journey itself.

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For the first time, the reality of the situation hit home. I had three weeks to relocate and two of them were booked on vacation. I took my traders to dinner that night and over several rounds of drinks, assured them they would be taken care of. They were family but in a few short weeks, I needed a new home.

I hadn't a clue where that would be.

Blink and You're in Business

It didn't take long for word to spread. Wall Street is a small place when it comes to news. Our trading coverage -- from Goldman to Morgan to Bear Stearns to Lehman Brothers -- lined their pockets with commissions generated by Cramer Berkowitz. That number totaled between $70 million and $90 million per year during my tenure running the desk.

They weren't happy their gatekeeper was relinquishing the keys to the castle, particularly when the castle did business the right way. As I assured them that our desk would be in strong hands, I was less certain about my next move.

Minyanville launched, I was the only writer and the Ruby Peck Foundation proved costlier than I anticipated. I needed a home that allowed me to stay in the flow and make some dough. After 12 years of trading, I had peers who had a vested interest where I landed. I listened to a few offers, unsure of which direction to pursue.

A former colleague called and asked me to meet with him before I made any decision. He worked with a reputable money manager at a fund located on Park Avenue. As part of their business model, they operated a "hedge fund hotel," providing space, trading systems and human capital in exchange for order flow and trading commissions.

I walked to their offices and was impressed with the large marble lobby that housed some of the world's largest financial institutions. I made rounds, sat with the principal players and listened to possible collaborations. "You should think about starting your own fund," they said, "We'll set you up here and help with the process and paperwork."

It wasn't something I had seriously considered but I needed a home and they were friendly faces with a solid structure.

And they believed in me, which was not something I overlooked. Minyanville was costing more than $50,000 per month and I had other obligations. Further, the effort required and costs to start a not-for-profit foundation after Sept. 11 were substantial.

I needed a revenue generator, something that could utilize my skills and underwrite a symbiotic ecosystem. I had honed my skills at Morgan, sharpened them at Galleon and demonstrated them at Cramer Berkowitz, building one of the finest desks on Wall Street. As I listened to the potential hedge fund structures, my mind began to calculate the windfall.

A typical structure charges 1% of total assets as a management fee and 20% profits as a performance fee. But they floated something different, a structure with no management fee and 50% of the profits. It was a deal reserved for the best traders on the Street, a back-end loaded payday based purely on performance.

They offered to seed me and as I had full faith in my abilities, I plowed most of my money into the fund as well. Others followed and before I knew it, I moved my personal items and sports memorabilia to my new Park Avenue home.

R.P.

Click here for the next chapter of memoirs, "War Games."

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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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