Managing Partner, Central Square Capital
Education: B.A. Finance, Bradley University, Peoria, IL
Mentors: Joel Tillinghast, Portfolio Manager, Fidelity Investments; Brian Feltzin, Managing Partner, Sheffield Asset Management
Central Square Capital began trading on August 3rd, 2007, and saw assets under management grow from $4.3 million to $35 million in just under two years.
Cardwell is the only full-time employee of Central Square. He reduced operational costs by relocating from Boston to a Chicago suburb. The reason I started with a small asset base and have worked to keep operational costs low is that it eliminates the pressure to swing for the fences. First and foremost, my goal is to make my partners money. I would rather manage a smaller asset base with partners who share my investment philosophy than a larger asset base that is wrapped up in shorter-term returns and daily performance updates. He admits his long only manager background caused some initial investor concern. The fund has a net return of +107% from inception through May 31, 2009. Hopefully this puts to bed any concerns about my ability to manage through a bear market.
Cardwell explains his success by structuring the fund as simply as possible. He says, I use a fundamentally based, bottom-up process to identify attractive long and short equity opportunities. I believe that emphasizing individual stock selection rather than market timing increases the probability of success and acts as a good risk management tool.
Brian Kennedy, former colleague of Cardwells at Fidelity Investments is not surprised at Cardwells success. Nobody I know works more diligently to uncover fundamentally mispriced securities. The ever-shrinking investment horizon of todays investment market opens a plethora of opportunities for Kellys skill set he says.
Cardwell plans to limit the fund to $300-$400 million. I have no intention of being a $1 billion plus fund. Research has shown that it is significantly more difficult for these mega funds to post superior results. [I think] the industry will see a shift towards smaller hedge funds. Traditionally hedge fund vehicles were designed to be able to arbitrage market inefficiencies. To do this, you need to nimble and able to look at more than just S&P 500 securities says Cardwell.
Prior to founding Central Square, Cardwell held an analyst position at Fidelity Investments, departing as portfolio manager in 2007. During his tenure at Fidelity, Cardwell managed the $60 million Select Automotive Fund, before transitioning to the $1 billion Select Software and Computer Services Fund, ranked as the number one performing fund within the science and technology sector in 2006.
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