Jared Dillian
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The Great Rebalancing

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December 1, 2004

Daniel Barach Solos With Hedge Fund, Picks Stocks for Big Gains

By Kathryn M. Welling

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Daniel J. Barach, 42, is bright, supremely self-confident. He runs a smallish Manhattan-based hedge fund called MLT Capital, L.P. So what is there about this guy that isn't straight out of central casting? Try performance. His fund rolled up better than a 24 percent net compound annual return in the five treacherous market years between 1999 and 2003 - including an eye-popping 71 percent net gain last year. But the oddest thing of all is that Daniel did it without the benefit of complex derivative hedges, arbitrage and black boxes. He did it the old-fashioned way: Stocks for the long term. He recently explained everything to me.

I've been known to ask in jest what someone's parents did wrong to have a child end up in Wall Street. But you've told me you actually credit your upbringing for at least some of your hedge fund's success?

Believe it or not! My mom was a social worker and probably is one of the most perceptive people I have ever met. She's just very good at sizing up people and situations. That's not something that you learn. It's almost genetic. I sort of got that from her and have developed it. My father was CEO of a public company [Phil Barach, U.S. Shoe], so I grew up with a sort of ingrained awareness of that role's importance in an organization; I learned very early never to underestimate how much a change at the top can do for a company. I got to observe my father go to a company that was somewhat insular and make dramatic changes in that organization, in its culture and in its rate of growth and earnings - and through that, in its stock price. I became intrigued with studying how a CEO could be so important to a company and to a stock. But I also remember as a pivotal event in my life something that happened in my senior year of high school.

Come on!