Behind the Balance Sheet #31 The Justice Warrior - Sir Bill Browder on Hedge Fund Investing, the Magnitsky Act & Surviving a Hedge Fund Collapse
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Feb 15, 2024 
Bill Browder, human rights activist and former hedge fund manager, discusses his career, the 90% fall and subsequent recovery of his fund, his deportation from Russia, and the tragic events surrounding the death of his lawyer Sergei Magnitsky.
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How Browder Entered Russia And Built Hermitage Fund
- Bill Browder started investing in Russia after seeing voucher privatization value where vouchers traded at ~$20 despite backing huge national assets.
- He launched the Hermitage Fund, raised $25m, and returned 865% in 18 months as Russian market exploded.
Asymmetric Risk Approach To Distressed Markets
- Browder framed Russia investments as high-risk/high-reward: maybe 50% chance of total loss, but valuations were so deep a small allocation could multiply portfolio returns.
- He used small position sizing to capture asymmetric upside after devaluation and privatizations.
From 90% Crash To 37x Recovery
- After the 1998 Russian default and ruble devaluation, Browder's fund fell ~90% then recovered dramatically as exporters' profits surged and Putin acted against oligarchs.
- His portfolio later rose ~37x from the bottom as state actions curtailed asset stripping.