Kaminsky's Call: Woulda Shoulda Coulda, My Hedge Fund Fantasy

For The Strategy Sessiondevotees, it marks a turning point in television history: the day David Faber cold-called me at JRO Associates, the hedge fund where I began my career two decades ago.

Sure, it was the beginning of a beautiful friendship—but could it have been a multi billion-dollar friendship, too? It's a question I can't help but ask, because David and I always talked about launching a hedge fund together.

And on Tuesday's show, the thought popped up again—but this time, a strategy did, too! (What a coincidence.)

I mentioned to David that our reporting on Europe's serial sovereign debt crisis had led me to a brilliant plan for setting up the K-F Strategy Fund, the Kaminsky-Faber collaboration that never was.

And if Strategy Session hadn't come along after my non-compete with Neuberger Berman expired, I'd be putting the plan into action right now.

Here's how it would work. After raising a billion dollars for our little fund, I'd visit various prime brokers and negotiate an extremely attractive line of credit and lever up 3-1. Our $1 billion has just turned into $3 billion: piece of cake!

I'd then spend the whole lot on Spanish and Portuguese 10-year bonds. After that brilliant $3 billion investment, I'd pay a visit to a currency firm, where I'd give away 1 percent to hedge out currency risk.

Next on the agenda: I'd lock in funding at a 3 percent cost of capital—again, piece of cake!—thereby generating a 4 percent carry trade profit. Do the math: that's $120 million, a return of more than 10 percent on original capital!

Being highly talented money managers, of course, David and I would take two-and-twenty as compensation—meaning 2 percent of assets and 20 percent of any profits earned. That would be more than enough to get us a swank office on Park Avenue and cover overhead, payroll, and all other expenses. Beautiful!

The only risk? That Spain or Portugalends up needing a bailout and the ECB says no...but hey, we'd otherwise lock in profits, making about $20 million a year in performance fees.

Say it with me now: piece of cake.

So it's too bad David and I committed to do this show for the foreseeable future.

Hopefully, when Strategy Session runs its course in a decade or more, the sovereign debt dominoes will still be falling—and we can move on to snapping up the 10-year debt of Sri Lanka, Brunei, Malaysia, or whichever nation happens to be suffering at the time.

Hey -- a TV host can dream.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

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