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
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
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
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
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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