market folly

We recently stumbled across an intriguing interview from HedgeFundNews with Galleon Group hedge fund manager and accused inside-trader Raj Rajaratnam from over a decade ago in 1997. This interview becomes all the more interesting when you look back at it with the bias that is prevalent now.

We've covered Galleon Group's demise as we posted back when Rajaratnam was charged and announced he was winding down the funds. Given all that has taken place, let's take a spin in the old time machine and head back to 1997 where Rajaratnam was interviewed a mere three months after founding Galleon (all bold emphasis is ours):

"Q. Could you describe your research process and where you see your edge?

A. We build the portfolio from the bottom-up, looking at sectors and within the sectors looking at companies. We have three analysts/portfolio managers who visit with approximately 400 companies every year. We all spend about a week a month on the West Coast doing that. Secondly, we have a network of 60 to 70 technology executives who are investors in our fund and they are a great resource to bounce ideas off. If we ask any of them which of their customers and suppliers are doing well or badly, we get four stock ideas, two on the long side, two on the short side. Also, we are engineers by training and have some understanding of technology.


Q. Could you describe the adjustment to being on your own and where would you like to take your business in terms of organization and assets under management?

A. One of the primary reason I left Needham was to focus on the investment management side. I was spending two to three hours a day as a shrink, dealing with people issues, organizational issues and strategic planning issues. It is a refreshing change to be able to focus on what I enjoy doing. Our assets are going to be limited by our ability to perform. If we find that we can't manage $400 million, we will go back to $250 million because I know we can manage that. At some point, you stop working for money, you work for pride. We want to win, we want to be the best investors in this emerging growth sector. Long term, what I would like to do is to build a technology fund as well as a healthcare fund and maybe a consumer/retail fund so that we offer investors broad exposure to the emerging growth sector."


Head here for the rest of the interview. It's interesting to look back and see his desire to become the "best investor" right from the get-go seemingly at all costs. It's been well documented that Galleon Group had a wide network of industry contacts and this interview from over a decade ago shows he utilized them to his advantage. For past resources on Rajaratnam, we took a look at Galleon Group's historical returns and had previously posted Galleon's September 2009 commentary.