by Kristin Todd
Bernay Box has over two decades of investment experience under his belt. With a confident business attitude, it’s no surprise that he started and now runs his own hedge fund.
Box graduated from Baylor in 1986 with a finance degree and began working with Rauscher Pierce Refsnes. He then worked for First Republic Asset Management, which jump-started him in the money management business. Box started Bonanza Capital in 1991.
“Bonanza Capital is a long/short hedge fund that invests in small capitalization companies that we believe are significantly priced incorrectly in the marketplace, due to the lack of analytical coverage from Wall Street,” Box said. “The hedge fund is simply a structure set up to give the manager flexibility, focus and financial incentive to make money for investors.”
This financial incentive stems from the fund manager personally investing alongside the fund investors. Box said the fund manager earns a percentage of the fund’s gains, but does not receive it until any losses suffered are recovered. The strategy, Box said, creates a strong incentive to make money “regardless of what the market does.”
It sounds like a good deal, however, much media attention has been placed on hedge funds due to their significant returns to investors. Box can handle the heat, though.
“The growth in hedge funds is based on a simple fact: It’s a better structure by which to deliver investment returns,” he said. “The media bias is always to highlight the blow ups, frauds or incredible compensation—none of which is very flattering.”
Although Bonanza Capital may consist of a small team of six analysts and two traders, it proves to be successful against competition.
“My primary business success, I believe, has been in attracting the people that have been instrumental in building Bonanza,” Box said. “Success to me is being the person that I was created to be while avoiding getting caught up in the ‘master of the universe’ syndrome.”
Box’s years in the investment business have taught him to focus not only on the present, but also on future opportunities and endeavors.
“Look at the business from a long-term perspective, and don’t cut corners for short-term gain,” he said. “Always run to where the ball is going, not where it is. And most importantly, play your game.”