“Odyssey was a real partnership. We built long-standing relationships with investors — who did very well — many of whom were with us from the beginning. Importantly, everyone had a very profitable experience with us. The firm was a very good training ground for young people coming into the business. They learned about balancing risk and reward. We gave them the ability to make decisions and allowed people to make mistakes and to think differently. We didn’t second-guess people.
We had a very rigorous process for deciding who we would hire. It included psychological testing, which looked for flexibility, open-mindedness and decisiveness among the characteristics we wanted. When interviewing prospective hires, we tried to understand the person’s character. I’d ask, ‘Who are your heroes? Where do you see yourself 20 years from now?’ The idea was to really understand the character of who it was we might be asking to join our team.
We wanted people who would act well under pressure — in both good times and bad. How they handled the good times was perhaps even more indicative of their character than how they handled the bad.
We carefully evaluated the risk-reward ratio in our major investments. We wanted to be sure that the upside opportunity far outweighed our analysis of the downside risk. I think that our willingness to be open, to change direction if necessary and to make decisions differentiated us. That included cutting losses when the time came.
It was very helpful to have such a valuable partner as Leon Levy, who clearly had the greatest influence on my career. We were really co-equal, and that was important. We complemented each other very well. We had different strengths, weaknesses, areas of interest, personalities and perspective. But together we made a powerful combination. He was more optimistic and creative.
Overall, I think the wisest investment decision was our call on the bond market in the early 1980s. We began aggressively taking long positions in bonds at a time when the country had just gone through the inflation of the 1970s. It was a contrarian point of view at the time, but one that worked out extremely well for us and our investors.
We saw firms that grew too fast. They took in money just because it was available but didn’t have the resources to properly manage or administer it. We were very careful to avoid that.
Many hedge fund managers don’t understand leverage today. It’s very sweet on the way up. But not on the way down. It has got to be used carefully and strategically.”
— Interview by Stephen Taub