For hedge fund manager David Hobart it’s all about getting one’s head in the right space. That means getting rid of “flawed and reactive” feelings that may interfere with objective investment decisions.
Hobart needs to meditate, not in the conventional sense of sitting on the beach and, in his words, adopting the lotus position. What he seeks to find is “gratitude.”
In that state of mind, “I’m able to observe myself without attachment. I clear the noise in my head and ground myself in the moment,” says Hobart. “I can sit, observe and be objective. It’s a lovely place.”
For some who have invested with Hobart since he founded his fund on February 1, 2006, his returns have also been lovely.
Since inception, the Brisbane-based fund Blue Sky Apeiron Global Macro Trust has had net annual gains of 10.4 per cent. The S&P/ASX 200 Index has lost 2.2 per cent a year during the same period.
Hobart, 40, started with $1 million and now has $8 million. He has visions of managing as much as $300 million and eventually employing a team.
“I don’t think there’s anyone like David,” says Vaughan Henry, the national relationship manager at Blue Sky, who sits quietly listening as Hobart tries to articulate his belief in miracles.
Hobart invests across interest rates, stocks, currencies and commodities. He seeks to exploit differences between the crowd psychology of markets and economic fundamentals.
“In the medium term there are inflection points where economic reality and perception begin to close,” he says. “They’re exciting moves. They’re big moves. I seek to exploit them.”
The younger brother of Tyndall Investment Management managing director Craig, Hobart grew up on the Gold Coast with a father who was badly affected by borrowing cheap Swiss francs that became much more expensive when the Australian dollar was allowed to trade freely.
Ironically, Hobart’s first job was as a foreign exchange trader at BT. He then became a proprietary trader there and at Macquarie before taking a year off to look after his first child.
Hobart worked as a proprietary trader at ABN Amro but in 2003 moved to the Gold Coast to trade his own money before starting his fund.
“I’m naturally sceptical,” he says. “I can observe the herd but I’m aware I could also be part of it.”
Hobart says the one of the biggest dangers is trading on emotion.
“At BT I saw traders affected by decisions the day before. If they made money they had a kind of swagger. If they lost money they got sheepish. I thought I have to figure out a way to profit from markets consistently,” he says.
Hence, Hobart’s efforts to get himself into a detached state of mind. It may come when he wakes up or after a run or martial arts session. Hobart tries to keep tabs on himself at all times.
“I can sense frustration when stretching my hamstrings,” he says. “You cannot be a successful fund manager without having a heightened level of awareness.”