Five tales from the trenches: An ex-portfolio manager divulges what it’s really like

Investors and friends always used to ask me what being a portfolio manager was like. Sometimes, like in a conference for instance, I couldn\’t really tell the stories I wanted to. I needed to keep things professional and, obviously, in sales mode, since many portfolio managers do.

Now that I no longer manage money, though, I can reveal several stories from the trenches from those days.

Investment committees are a pain

Many fund managers are accountable to an investment committee to get trades approved by senior executives. These committees are a joke, since the manager knows a good investment far, far better. Also, with any committee, trade ideas have a tendency to gravitate towards a common average, along with a manager is always trying instead to produce uncommon returns.

Once, while I was on holiday long ago, my investment committee chose to sell our shares of ATI Technologies Inc. At the time, my fund was the biggest shareholder within the company, and my committee didn\’t like the stock’s technical chart pattern.

Upon my return, I had been livid and threatened to quit. We bought back all of the stock at a higher level, and that i had some sweet revenge when ATI was acquired at a big premium about a year later.

Luck is sometimes more important than skill

In 1997, my mutual fund owned Bre-X Minerals Ltd. We\’d bought very early also it kept rising so we kept selling it. However i still had a decent-sized position.

My fund was supposed to be exclusively small caps, and Bre-X had quickly blossomed into a $4-billion company. My boss kept saying to sell it because it was no longer a little cap. I argued that I bought it if this was small, and so i should still be allowed to keep some.

But he kept on about it, and so i sold all my Bre-X shares, some of them to my boss\’s mutual fund, to keep the peace. A couple of months later, Bre-X was revealed to become a total fraud, but I could happily let my investors know that I had exited my entire position prior to it imploded. I looked like a hero, however it was complete luck.