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Undoubtedly Goldman Sachs has had an influence on Och's business structure and style. Och said among the many things he learned at Goldman was how to invest, how to hire, how to build a business, and how to think

Och listed Robert Rubin, his first boss, as a significant influence. He declined to name others because he might leave someone out. It was obvious that he was a big admirer of Teddy Roosevelt. An Andy Warhol silkscreen of Roosevelt hangs prominently in his office. Och's modification of "Speak softly and carry a big stick" is "Do what you think is right for the long term rather than what is popular thinking."

FOUR DISCIPLINES

The investment methodology is event-driven investing. There are four major disciplines: merger arbitrage, convertible arbitrage, event-driven restructuring; and distressed credits. The distressed credits strategy was added in August 1999; the other three disciplines are original strategies of the firm. Och said the decision was made to build the distressed credit business unit in October 1998. It was a great time since Wall Street was cutting back in the area. Over the ensuing period, he has hired six professionals. "We have built the unit well in advance of the opportunity."

Generally 40 to 50 percent of the portfolio is in merger arbitrage; this equates to 50 to 60 positions. Merger arbitrage deals—mergers, tender offers, proxy contests, rights offerings, exchange offers, and leveraged buyouts—include only those that have been publicly announced. Examples of positions in this area include MediaOne Group, which was acquired by AT&T, and Mannesman, which merged with Vodaphone.

Another 20 to 30 percent is in convertible arbitrage (about 50 positions). The convertible arbitrage part of the business takes a mathematical approach combining hedging of warrants and other derivatives with market experience. Fixed income and currency exposures are fully hedged.

The remainder of the portfolio is made up of equity restructurings and distressed credits—about 20 restructuring positions and 20 credit positions.

The equity restructuring unit, which had been downplayed for the past two years, is now growing due to fundamentals creating new opportunities. Many instances exist where publicly traded subsidiaries