1/18/2011 Cara Goldenberg: Analyst to hedge fund…

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Interview by Jodi Glickman, contributor December 28, 2010: 9:50 AM ET

FORTUNE -- At just 30 years old, Cara Goldenberg is at the top of her

game. She is the founder and managing partner of Permian Investment
Partners, a New York City-based hedge fund she launched in 2008.

Goldenberg began her career at Morgan Stanley (M S, Fortune 500) as an

analyst in the investment banking division. Her strong quant skills quickly
funneled her into the private equity group, a move that allowed her to
circumvent the traditional analyst-associate-business school route that
many of her peers would follow.

Less than two years into her stint at

66 40 Morgan Stanley, Goldenberg was
one of the first young investment
bankers to be picked off by the Hot List Sponsored by:
hedge fund industry. She left to work
for Highbridge Capital Management. Steve Jobs takes leave of absence
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her away from Highbridge.
Fortune recently spoke with
Goldenberg about her impressive
rise to the top. Here's an edited
transcript of the conversation:
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driving force for you as an
investor?
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Goldenberg: I was trained early on to

focus primarily on management
quality. If you follow brilliant Job Search See 109,143 new jobs added today
management teams, it will lead you
to brilliant investment ideas. It's job title or company location

pattern recognition. Accounting jobs Engineering jobs Finance jobs

Management jobs Marketing jobs Sales jobs
At Highbridge, I was able to hit the jobs by
See all jobs
ground running because I was
hardwired to look at things the way
they did. I was looking at a universe

money.cnn.com/2010/12/28/…/index.htm 1/6
1/18/2011 Cara Goldenberg: Analyst to hedge fund…
of European companies that were
mismanaged and had depressed
earnings. They had cost-cutting and
capital allocation opportunities that
were far better than their U.S.
counterparts. But their share prices
didn't reflect that potential. We knew
that the right management teams
could turn these companies around.
And no one else was terribly
interested in them.
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Cara Goldenberg, 30
Highbridge, they said, "Go invest in Europe." That was really the beginning.
Brahman. The European team at
Highbridge left so I started looking at
European Special Situations. That's
how I met the founding partners at
Brahman. I knew Europe reasonably
well and spoke French and Italian.
So when Brahman hired me from
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Originally, I was the only one looking at European opportunities. I was

Markets
focused on a different geography and I had real autonomy. Within two
years, approximately two-thirds of the fund's assets had shifted to Europe Market Movers US Indices
and I had hired several analysts to help me.
Company Price Change % Change
They didn't give me a budget, it wasn't "here's 'x' dollars." It was, "find the Citigroup Inc 5.13 0.09 1.79%
best ideas and we'll figure out how to prioritize." I am very grateful to them
Bank of America 15.25 0.48 3.25%
for taking a chance on me.
Corp...

Intel Corp 21.08 -0.21 -0.99%

The first idea of real magnitude was Fiat. When we launched Permian in
2008, a famous hedge fund manager gave us money because, he said: JPMorgan Chase and 44.91 0.46 1.03%
"You had the guts when you were 23 to look at a company that no one else C...

did. That's why I believe in you." Microsoft Corp 28.30 0.11 0.39%
Data as of Jan 14
How did you get to Fiat? symbol Sponsored by

Sergio Marchionne, the new CEO, was a guy with a track record for
creating value in Switzerland. He spent time in GE (GE, Fortune 500) and
made his mark at a Swiss quality control company. He came into a company
[Fiat] whose reputation was tarnished and whose brand equity had been Sponsors
decimated. But philosophically smart people choose smart businesses.
Marchionne saw the opportunity, and we saw Marchionne.

We were likely the only investors outside Italy interested in Marchionne at

the time. After some begging and pleading, he granted us a meeting.

Marchionne joined Fiat with a mandate to do whatever was necessary to fix

the company. We bought some shares. He confirmed what we surmised. He
had full support of the board and its new chairman. If auto was worth more
dead than alive, he'd kill it. Full Na m e

Addre ss
Fiat was the biggest employer in Italy at the time. He took on the labor
City
unions. He was fearless. He had real skin in the game and his incentives
St/P r Zip/P o
were aligned.

Co ntinue
Marchionne saved Fiat. He got $2.25 billion to cancel a legacy agreement
P rivac y P olic y
that Fiat could "put" itself to GM (GM). No one thought it could happen --
O uts ide the U .S . and
there's no way this debt-laden, cash strapped Italian company will win in an C anada, c lic k here.

international court of law. But Marchionne walked away with $2.25 billion of
cash and Rick Wagoner [then CEO of GM] was fired shortly thereafter. This
was half of Fiat's market cap.

We exited the position in the mid-teens and made a lot of money. It was the
money.cnn.com/2010/12/28/…/index.htm 2/6
1/18/2011 Cara Goldenberg: Analyst to hedge fund…
biggest profit generator in Brahman's history.

Were you surprised by your early career successes?

Was I surprised? No, it wasn't like I opened the door and there was Ed
McMahon. The day Rick Wagoner parted with $2.25 billion, I was blown
away. But no, I was never surprised by the success. I just became more
and more convinced of the process and realized what a competitive
advantage it was. This management-driven philosophy allowed me to follow
the most intelligent, successful and capable people in the world. It allowed
me to be contrarian. It made me excited to work harder and expand the
team.

Tell me what differentiates Permian from other hedge funds.

Most of our investments are a product of what we've learned from working
with and investing behind really great management teams. We're very
isolated. We'd rather spend our time learning from successful operators
and investors. CEO's making strategic decisions every day -- they are
essentially investors themselves -- allocating capital in the most
shareholder-friendly way. This approach keeps us independent and it
keeps our portfolio unique.

We have a network and investor base that is totally different from most
hedge funds. Our reference list is our management teams. People say,
"can you give me your list of references?' And we send a list of CEO's. And
they say, "No, we'd like to speak with your investors." We say, "Those are
our investors."

What would you say is your competitive advantage?

I can get a management team to articulate an idea that will cement an

opportunity that other colleagues perhaps can't get. It's communication, but
it's stylistic. I think it stems from meeting with hundreds of CEO's year after
year and really listening to, and learning from them. And asking the right
questions.

We recently met a Finnish guy who spent 18 years at P&G (PG, Fortune
500) selling laundry detergent and Sunny Delight. He's now running a
sporting goods conglomerate in Finland -- with totally different products
and different distribution challenges.

Instead of saying, "What the hell do you know about a sporting goods
company?" We looked at it the other way. We asked, what did it take for
him to step out of eighteen years at P&G, where he had $25 billion of
revenue. What did he see?

I asked him, "How many opportunities did you turn down before you took
this one?" The answer was over 20. But when I asked, "Why did you take
this one?" It was totally obvious.

There were brands in this portfolio. Wilson for instance, with 2% market
share. Not 20% like you might think. Wilson had tremendous market power
that hadn't yet been realized. There's enormous brand equity there.

Our investment had nothing to do with the business, per se. We didn't even
identify a market opportunity. We just knew enough to talk to a guy who left
P&G after 18 years.

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1/18/2011 Cara Goldenberg: Analyst to hedge fund…
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Facebook User Jan 2

***

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should Check Out this Website!
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Chamman Lal Solanki D ec 29, 2010

Interesting

Leonid Bogza D ec 29, 2010

There is a good offer co-investment

Facebook User D ec 29, 2010

***

It's a Little off Topic but Anyone Looking for a Job

should Check Out this Website!
They are Hiring People to Work from Home for $77 / hour

www.CNN-jobs.com-employment.com

Tapping into the Online Business Trend has

really Saved my Family from the Recession!

And I Can Work from Home with my Kids!

They are Hiring Today.

***

Chris Reyes D ec 28, 2010

@Roger - I do stick up for my friends: In what capacity do you know Cara
Goldberg, on what grounds can you state "she slept her way to the top", and
then follow it up with "the truth can hurt sometimes"?

Roger Huang D ec 28, 2010

@Chris
I apologize if you're a friend of Cara's. The truth can hurt sometimes.

The fact that Cara started a hedge fund with a wealthy family's money at the
age of 30 does not make her deserving of Jodi Glickman's statement that "Cara
is at the top of her game."

money.cnn.com/2010/12/28/…/index.htm 4/6
1/18/2011 Cara Goldenberg: Analyst to hedge fund…
Let's look at the circumstantial evidence:

1. Cara spent a couple of years as an investment banking analyst, where she

honed her skills in photocopying and putting together comps. This, along with
her multilingual abilities, doesn't qualify her to join a hedge fund (Highbridge).

2. Before the paint on her proverbial office door at Highbridge could even dry,
Cara left to join another hedge fund (Brahman). I don't believe her stint there
qualifies her to run her own hedge fund.

3. The only reason anyone is even talking about Cara is because she sent her
head shot, along with some stock picks, to Warren Buffet. Warren, known in
Omaha for his keen appreciation of beautiful women, invited Cara to join him for
lunch. Now, if it had been Kara's male partner who had sent the stock picks to
Warren instead, do you think they would all be dining on Omaha steaks
together? I think not.

4. If you had read what Cara wrote about her hedge fund's alpha, you would
have seen that it doesn't differ from other hedge fund's marketing tripe.

Cara said her fund will take “high-conviction, concentrated long positions with
rigorous focus on early-stage, highly-original contrarian idea origination” and
“will engage in a hedging strategy aimed at isolating alpha and removing
exogenous risk in long positions.” Not very original of Cara.

5. Cara's Permian fund is basically comprised of a wealthy family's money. If any

of us looked as beautiful as Cara and could charm the pants off of an old,
wealthy octogenarian the way she did and get him to open up his wallet, then
Jodi Glickman (Fortune.com) would be writing about us instead.

To Jodi Glickman: there are so many other hedge fund managers worthy of
having a Fortune article written about them. I don't believe that Cara's starting
a hedge fund with a wealthy family's money at the age of 30 is deserving of
your statement that Cara is at the top of her game.

Chris Reyes D ec 28, 2010

@Roger - your claims are vile and baseless. Clueless little man...

Roger Huang D ec 28, 2010

It must be nice to look like that, sleep your way to the top, and claim the secret
to your success is that you know all the right questions to ask.

http://www.businessinsider.com/cara-goldenberg-warren-buffet-2010-2

Michelle Holts Dec 28, 2010

***

It's a Little off Topic but Anyone Looking for a Job

should Check Out this Website!
They are Hiring People to Work from Home for $77 / hour

www.CNN-jobs.com-employment.com

Tapping into the Online Business Trend has

really Saved my Family from the Recession!

And I Can Work from Home with my Kids!

They are Hiring Today.

***

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