Alfred Winslow Jones, more academician than investor, founded the first hedge fund in 1949, fashioning it around core tenets that persist to this day. A fierce believer in (reasonable) leverage, he preached (and practiced) the gospel of long-short stock portfolios. He charged a 20 percent performance fee — unheard of in its time, though standard today — justifying it with a piece of captains’ lore from antiquity: Phoenician sailing ships, he was fond of saying, claimed 20 percent of a cargo if they delivered it safely to...
