Izzy Englander Opens Up to TIGER 21

Jun 21, 2010

Izzy Englander Opens Up to TIGER 21

Renowned hedge fund manager shares frequently asked questions and thoughts on the industry with
leading peer-to-peer learning group for high net worth investors

New York, June 21, 2010 – Another notable hedge fund manager in a long list of luminaries visited
TIGER 21recently to provide his views on investing and field some questions from the member-only
luncheon. Millennium Management LLC founder Izzy Englander provided the peer-to-peer learning group with a rundown of questions he is most commonly asked along with some candid answers.

TIGER 21’s Headliner Series has had its share of impressive speakers including some of the best and
brightest from the financial field. Past presenters include Carl Icahn, Thomas Lee, Steven Schwarzman,
Mohammed El-Erian, David Rubenstein, Jim Rogers, William Ackman, and Nouriel Roubini, among a long
list of others. TIGER 21also hosts notable speakers from other disciplines and have welcomed Dr. Wafa
Sultan, an outspoken advocate for moderation in the Muslim Community; best-selling author and Columbia University Medical Center professor of surgery Dr. Mehmet C. Oz; former U.S. Senator Gary Hart; and George Mitchell, former United States Senate Majority Leader, among others.

Millennium, which Englander founded in 1989, uses a diverse set of liquid strategies whose returns are
generally non-market correlated. It employs about 120 managers and 800 overall employees globally.
Englander and some 25 to 30 other staff focus on risk management for the funds, which as of April 1 of
this year had $7.1 billion in assets under management. Englander employs a risk-reward ratio of about
3-or 4- to 1 – he is willing to risk a 5 percent loss to make a 20 percent gain. So far this strategy has paid off exceptionally well for Englander and his investors.

Beginning his presentation half-jokingly, Englander said the top four questions he most frequently is asked since the collapse of Lehman Brothers are all the same: “How do I get out of a fund?” Of course, he would rarely hear that from investors in his funds – since 1990 Millennium International and Millennium USA have produced an average annual return of 15.68 % and 15.79% respectively. Even in the doldrums of 2008, when the Standard & Poor’s index was down nearly 39%, the Millennium funds were only down about 3%. Englander also noted that he has approximately 20 percent of his wealth in his funds, so he has extra incentive to monitor the risks and rewards of the funds.

Trust

Outsized risks by some funds as well as banks during the financial crisis certainly caused a lot of investors to reexamine their portfolios and their relationships with investment advisors and money managers. “The mistrust that now permeates the wealth management business will take a few years to subside,” estimated Englander.

Part of restoring that trust will require investors to do more due-diligence. He has experienced this
increased scrutiny first-hand, noting that he now gets requests for meetings from investors with much more frequency than ever before.

“Hedge funds will have to get used to more rigorous scrutiny from regulators as well as investors,” said
Englander. For hedge funds in general, restoring trust will come from performing multiple audits and
having third-party verification among other things.

In fact, Englander – who in the past has been characterized as secretive -- has told his investors that they will be receiving semi-annual copies of Millennium’s audited financial statements and monthly reports detailing the fund’s trading exposures.

Regulation

When asked about the impact of proposals to increase regulation on the hedge fund industry, Englander
was not unnerved. He does not see regulation as much of a concern as long as the playing field is level. “If it is, we will find a way to make money,” he said.

Several TIGER 21 members asked specifics in terms of moves by the Securities and Exchange Commission to crackdown on high-frequency trading as well as some traders to trying to establish co-location operations. In reference to the co-location question, Englander reasoned that it was all part of being in a competitive business “– there will always be some players setting themselves up to do better.”

However, some potential rule changes could negatively impact his business. For example, he said that if
banks are forced to sell-off or close their proprietary trading operations, it will not necessarily be a boon to Millennium. Rather, it could in fact limit the options that hedge funds have to borrow money.

Fees

A constant source of criticism of hedge funds is the fee structure that most charge. On this Englander said, “Investors need to ask fund managers ‘What do you do with the fee?’ There has to be alignment of the fee structure. The fee should be commensurate with the fund strategy. If it is trading intense – it dictates a higher fee.”

The Millennium funds charge a performance fee as well as expenses, but no management fee. If
investments are making money the investors pay the performance fee. This is the only way the
management company gets compensated, reasoned Englander.

Advice

Englander closed his presentation with a thought that certainly resonates with TIGER 21 members -- who are continually learning and researching about finance and their investment in order to become better managers of their own wealth. Englander said, “Remember, it is not about initial investment, it is about maintenance of investment. Don’t invest and forget. Stay current on fund.”


About TIGER 21
TIGER 21 is the nation’s premier peer-to-peer learning group for high net worth investors. Building on
shared collective intelligence, TIGER 21 members seek to enhance investment returns while limiting their investment risks to acceptable levels. There are currently sixteen TIGER 21 learning groups, representing more than 160 investors, with investable assets over $10 billion. Founded in New York, TIGER 21 now has investor groups in New York, California, Florida and Texas. For more, visit http://www.tiger21.com.

If you are interested in learning more about TIGER 21, please complete the contact form and you will receive a copy of our most recent Asset Allocation Report.

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