The South African chess master who became a top global hedge fund manager

George Michelakis, one of the strongest chess players South Africa has ever produced, traded the black and white squares for the world of investing.

Michelakis is the founder of Gladstone Management, a London-based hedge fund where he serves as the chief investment officer.

Gladstone’s investment strategy is designed to outperform equity markets by a significant margin through long and short investments.

It employs a fundamental research approach to identify companies and industries that are structurally value-creating or value-destructive.

The research focuses on governance, industry structure evolution, structural change, corporate change, balance sheet structure, capital allocation and returns on capital.

He launched the Lasker Fund in 2006. It is named after former world chess champion Emanuel Lasker, one of the greatest chess players of all time.

Since 2006, the fund has compounded capital at a rate of 5.35 times, compared to 3.43 times for the MSCI World.

This strong performance saw Gladstone grow its assets under management to approximately $2 billion.

Gladstone has been named European Hedge Fund of the Year and has won awards for being the top-performing five-year fund for three consecutive years.

Michelakis was also featured in The Hedge Fund Journal’s “Tomorrow’s Titans” report, which identifies the leading figures and rising stars in the global hedge fund industry.

Speaking on the Behind the Balance Sheet podcast, he stated that the fund typically holds around 25 long positions and twice that number of short positions.

They generally have a 200% gross, which he thinks you need to make a long-short approach work.

Aggressive accounting is one of their leading indicators on the short side, as it tends to be a sign of a management team that is trying to prove it’s better than it really is.

Although it is easy to pick up with a fair accounting knowledge, it is rather dull, and many investors prefer the sexier part of investing – picking winners.

From chess master to starting a hedge fund

Michelakis was one of South Africa’s most talented chess players and earned the title of International Master (IM) in 1995.

He won the South African junior championships while at school and went on to win the South African National Championship in Cape Town in 1993.

In the same year, he tied for first place in the South African Open in Durban alongside English International Master Malcolm Pein.

For several years, he was the top-rated player in the country, maintaining a FIDE rating that hovered around the 2,430 to 2,440 mark.

This rating is exceptionally high for a non-professional player who was simultaneously completing an Actuarial Science degree.

One of the best performances came in 1992, when he took third place in the World Under-20 Chess Championship.

He also represented South Africa in major international competitions, including the 32nd Chess Olympiad in Yerevan, Armenia, in 1996.

He considered a professional chess career, but realised that it would be a challenge to make a living, considering the tremendous competition.

As Michelakis’ talents extended well beyond chess, his transition into finance and investing was seamless.

He graduated top of his class in Actuarial Science from the University of Cape Town in 1995 and later qualified as an actuary in London.

He gained experience at Credit Suisse (M&A) and in private equity at Capital Z Partners before moving into the hedge fund space with Lansdowne Partners.

In 2005, he left Lansdowne Partners to start Gladstone Management, where he continues to serve as chief investment officer.