The Hedge Funds' Young Turk

Almost 70 million people know about Ahmet Okumus. But not many of them are on Wall Street.
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On one of the top floors of 575 Lexington Ave., informally known as "Hedge Fund Row," a mouse-run of offices fans out from the reception desk of Bear Stearns Asset Management. These bare-bones offices are the dressing rooms of adolescent Wall Street, where young managers preen for the part. Okumus Capital Management is just another doorway, albeit one behind which Ahmet Okumus (pronounced OH-ka-moosh) boasts double-digit results that warrant a second look.

Okumus' success so far sounds scripted, right down to being approached for a new book about the next-generation "market wizards." His long-short equity fund, Okumus Opportunity Fund, is up 69.25% in the second quarter, 84.6% year to date. During the same periods, the

Standard & Poor's 500

gained 6.7% and 11.6%.

But while Okumus, one of hundreds of young managers of tiny Wall Street hedge funds, isn't a legend here on Wall Street, in his home country of Turkey, the 29-year-old is already a star.

From a pile of magazines on his office floor, he flips open

Tempo

, the Turkish version of

People

, which devoted a flattering three-page story to him two years back. It's an emigre success sketch, framed with skyline shots of Manhattan, photos of a thoughtful Okumus and hints of a playboy-decor Manhattan apartment in the background. "I look

so

stupid in this picture," he says, flashing white teeth.

That star power was on display at a hedge fund conference at Manhattan's chi-chi St. Regis hotel. That day, Wall Street's hedge fund equation was in full mathematical swing: Okumus had a track record of winning stock picks and the backing of Bear Stearns, which does a massive business in clearing for hedge funds. His hedge fund was on its way from being a slightly amusing upstart to a $17 million fund with a buzz.

Milling around a table groaning with pastries amid dozens of other young managers, the handsome, dark-eyed Okumus was the essence of vainglory. "You should write about me," he said. "I'm the best out there."

His personal style is attitude and

Armani

, though his investing style wears a homburg. His idol is middle America's favorite value player

Warren Buffet

, who eschews Internet stocks. Okumus does too -- but only after a painful lesson.

Two weeks before the end of 1998, with his hedge fund set to report returns of 35%, "I shorted

Amazon.com

(AMZN) - Get Report

and

Charles Schwab

(SCH)

," he says, shaking his head. "We ended up 5% for 1998." Now Okumus has sworn off Net stocks, and the fund has prospered, showing 84.6% gains so far in 1999.

Born and raised in Istanbul, Okumus began his stock-picking career as a teenager in the mid-1980s, dabbling in the fledgling stock market, divining sales from talking to suppliers and estimating per-share earnings based on his best guess on profits. He doesn't have the pedigree of an Ivy League education or a marquee brokerage firm experience, but he does have the sense of entitlement. He attended

San Diego State

and spent five years managing friends' private accounts and family money. Then in 1997 he opened Okumus Opportunity Fund to "qualified investors" -- i.e. those with $100,000 or more -- and registered in Bermuda.

His first investor was his mom.

These days, he talks about a meeting with "the

Soros

people." Wealthy investors are sniffing around and could potentially place their faith and money in his hedge fund. "Last year, no one would take our calls. Now they've seen our performance, and they're calling us."

Still, even Turkey's favorite hedge-fund manager has the disadvantage of being young, small and unproven over the long term. Many hedge fund investors won't even look his way with such a small amount under management, no matter what his hometown reputation is. Explains one hedge fund investor, "Lots of these guys are the walking definition of hubris. With a small amount of money, they can make the outsized returns easily. It's when they grow -- then you see whether they can keep doing it."

Strolling through the fluorescent-lit halls around his office, Okumus raps methodically on the plaques of each office door. "These guys are another hedge fund . . . these guys, Russians. Who knows what they do. This guy," he passes a paper sign hanging on a now-quiet office door, "says he'll buy himself a real sign once he hits $20 million," he laughs. "And this guy," he whispers conspiratorially, pointing to the corner office, "used to work with John Meriwether."

At 7:30 p.m. one night this summer, the office floor has gone quiet except for Okumus and one other hedge fund manager -- one of the first employees of Julian Robertson and

Tiger Management

. "He's an older, hardworking guy," Okumus says. "Nice guy, smart guy. We hired him last Friday" to lend a hand in research and provide a grown-up air of legitimacy. First with Tiger and then with

Brown Brothers

, Alan Schmidt, 56, has been in the investment business for 36 years, longer than his young employer has been alive.

He'll be here several more hours after his college buddy and pony-tailed marketing guru, Ted Coakley, goes home, tracking some of the 10 to 12 stocks he follows, like

Hot Topic

(HOTT)

,

Pioneer-Standard Electronics

(PIOS)

and

Microchip Technology

(MCHP) - Get Report

, which "has moved up very nicely from the low 20s to 49." The room is sparse save for a television trickling nonstop

CNBC

, a

Statue of Liberty

poster and

Barron's

hedge fund rankings framed on the drywall.

"I have to work these incredible hours. That's the only reason why we do so well," he says, letting another opportunity for modesty pass unmolested. "If I were like everybody else, I'd perform just like them."