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he can have discussions at any time around the clock. Och is motivated by building the best team.

ASSETS OF AT LEAST $1 BILLION

While their views differ on what is optimal capacity and how to grow the business, all the managers, when interviewed, had assets under management of at least $1 billion. This alone attests to the fact that they are among the elite managers, since only about 55 managers on a global basis fit this category. Several of the managers cluster between $1 billion and the $2.5 billion level, including Wilcox, Henry, Tepper, Singer, Sussman, Stark, and Cooperman. At year-end Och was at the $3.5 billion level. The $4.5 billion-plus managers include Rajaratnam, Kovner, Kingdon, Ainslie, and Griffin.

CLOSED TO NEW INVESTMENT

Many of the managers are often closed to new investment. Some may take strategic investors or investors to fill investors redeeming. This indicates an acknowledgment that growth in assets is not of prime importance; maintaining superior performance during different market environments is. Being the largest hedge fund is not the main objective. As Kingdon said, asset size is a potential concern, not a goal.

Kovner said that if he felt he were at capacity, he would return assets to investors. In 1995 he returned two-thirds of assets to investors because he felt that under current conditions, the asset size was too unwieldy. Kovner says he would do the same from time to time.

Tepper made the decision in mid-2000 to shrink Appaloosa to $1 billion and go back to its core competency—distressed and high-yield bonds. He intends to return about $500,000 to investors because he feels the fund's best performance generally occurs at about the $1 billion level.

Stark feels there isn't a fixed level of capacity for his core style—convertible arbitrage. Capacity changes with the markets and the environment. At points when there isn't sufficient opportunity or concerns in the market, taking capital is not the right thing. At other times, capacity seems beyond the capital of even the largest arbitrage fund.