The Nomad Fund

On Thursday April 14, the Indianapolis Business Journal (IBJ) reported that the assets for Keenan Hauke, a Fishers money manager and owner of Samex Capital, were to be frozen immediately.  His first preliminary court appearance will be on April 25, and they will decide how to proceed from their.  His former trader Scott Noble, now opening up his own firm called Ternion Trading Group, resigned and immediately called authorities to report a “serious” matter.  The following line particularly stuck out in the IBJ article as hilarious:

A complaint filed by the state against Hauke, Samex Capital Partners LLC and Samex Capital Advisors LLC said Hauke “misled investors by failing to inform them that the funds they were investing would be converted to his personal use.”

I am not sure the above comment from the article even needs any further discussion.  Obviously it is highly illegal to use client assets to live a more luxurious life for yourself, but once again greed rules.

I write about this because it is in my backyard and I actually met with Keenan in his office to discuss his business and mine, and to see if their was any overlap we could team up on.  I never talked to Keenan after I left his office in the early summer of 2010 and hence never teamed up with him.  He told me that he had been running a hedge fund since 2000 and had no down years and in fact crushed it in 2008.  He was a pure technical analyst day trader.  He told me the firm had roughly $65 million in assets, but the hedge fund only made up about $10 million.  The other assets supposedly came from the corporate 401k accounts from around the Indy area, where he used  a San Francisco based platform provider to day trade the individuals accounts in the 401k plans, and some individual client accounts he traded in, outside the hedge fund.

Anytime someone says they have been managing money for an extended period of time and has never had a down year, I begin to question things.  Not that it can’t be done – because I know many legit hedge funds that have actually accomplished this – but it is not an easy feat, to say the least.  His office near 106th and I-69 sits just off a very busy interstate on the top floor where the executives of a failed mortgage company used to reside (no pun intended).  The individual offices were huge, with large windows in every office.  It seemed drastic and very expensive for the amount of money he was actually managing.  Don’t get me wrong $65 million is quite a bit, but I could already tell his spending habits were large.  Then I am driving down the highway one day several months ago and I see a giant Samex Capital sign at the top of the building, facing the highway.  Now I never once suspected that he was running a Ponzi scheme, and he is technically innocent until proven guilty, however, when your trader quits and claims serious fraud against your investors, I found it hard to believe it is not true.  My question the whole time has been: if you are really as good as you say you are, why aren’t you managing billions of dollars?  He had something like 4 advisors in his office trying to drum up new business, but no down years for 10 years and making money in 2008.  This fact should have had clients knocking down his door to invest with him.

In a more recent event, DrunkNomad, my partner on the site was offered a contract position with Samex Capital to help get a new website up and running, along with trying to get Samex into Social Media outlets.  We had many phone discussions on whether or not we thought it would be a good opportunity.  Keenan kept saying that he would teach DrunkNomad how to day trade and hopefully incorporate him into the firm after the contract expired.  I had an eerie feeling the whole time and just thought something didn’t add up.  Keenan was spending like he had unlimited capital, yet couldn’t grow the firm, even with unbelievable returns.  DrunkNomad declined the contract, and has not spoken to Keenan since.

Keenan Hauke contributed on a regular basis to the IBJ writing articles on money management, was on CNBC, Fox Business, and featured in Barrons and Bloomberg Magazine, according to his brand new website.  Attention to all individual investors that give one ounce of credibility to anyone on TV or writer of an article: these guys are not automatically credible because they are on TV.  In fact I would argue the best money managers never waste their time with these garbage programs and articles because they are too busy managing your money!  It takes quite a bit of time and research to truly understand how to make money in the markets, and I can tell you that some of these so-called “investment gurus” spend hours in order to speak for 10 minutes on some news program.  Every once in a while you will get a credible commentator or article writer on the boob-tube, but the majority actually pay large sums of money to be on these programs.  Please understand this by no means makes them capable of managing assets.  This recent outright fraud gives further proof of being on TV does not make you credible.

Why does this concern me?  While I am very happy they busted this clown, I am very displeased that it was so close to home and will give prospective investors yet one more example of distrust.  Already every prospect asks, “How are you different from Bernie Madoff?”  Now they are going to ask: “How are you different from Keenan Hauke?”  While it is a seemingly easy answer, most investors still don’t understand.  To all investors reading this that have money with a money manager, please make sure the assets are NEVER held out of your name.  Meaning, make sure that the account always stays in your possession, in your name, and in your control.  If you want a money manager to make trades and manage your assets, simply set up an account at a discount online broker, and only give the money manager the power of attorney to trade in your account.  Therefore only allowing you to withdraw and deposit funds into your account.  If you decide to invest with a hedge fund which requires a Limited Partnership agreement, then do your due diligence.  If you would like a rundown on how to do proper due-diligence then email me and I would be happy to discuss.  And to clarify, a money manager is someone that actually makes trades and manages your assets, not Edward Jones, Merrill Lynch, Morgan Stanley, Northwestern Mutual, or anyone that calls themselves a financial planner, advisor, etc etc; these clowns are simply marketing and sales men who take your assets, collect a fee and throw you into mutual funds with large fees, or trade stocks only based on their firms’ buy-sell list.  The majority have absolutely no clue on what is going on in the economy, stock markets or geopolitical risks in the world.  I am adamant that your money manager should not be your financial planner or your insurance agent.  These jobs and products should be completely separated, but enough on this topic for the current post.

Just for fun I thought I would post a picture of his business card.  Notice it says the first Indiana Hedge Fund, it should say the first indicted Indiana Hedge Fund Manager!  Also now that this clown is (most likely going) to jail, or at least booted from the investment industry, I am claiming all rights to his slogan because I love it!  No Bear. No Bull. No Limits. (No ethics?)  Except I won’t steal client assets, promise.

Side note: how does being a competitive swimmer have anything to do with money management or running a hedge fund?  Maybe his slogan should have been “Helping Your Money Take a Dive.”