The second of his “two lives” is more philosophically geared towards making a lasting contribution to the societies that have offered him so much — both India and America. He grew up and was educated in India before coming to the U.S. in 1981 to study at Harvard’s Kennedy School of Government.
“I know I’m going to die one day and I know I’m not going to take my wealth with me,” he says. “From those who are given a lot, much should be expected.” The result of Chaudhri’s conviction is the IndoCenter of Art and Culture, a non-profit organization, which he founded, focused on the presentation and support of contemporary art from South Asia. It has been in existence for roughly a year. Clearly both lives are central to who Chaudhri is.
Professionally he has his hands full these days. Technology stocks are out of favor with most investors. In the hedge fund business, where no advertising is allowed, business is built on personal relationships and trust with wealthy investors. He has to convince his patrons to stick it out and keep their wealth in his hands. Digital Century tries to take a long-term position in the stocks that it buys. Chaudhri uses his expertise as a research analyst to find companies that have solid prospects over a substantial period — a year or more. But clearly almost all technology companies suffered in the markets in 2001.
“It was not a pleasant experience,” Chaudhri admits. “We tried to avoid many of the worst excesses of the Internet bubble, but we didn’t escape all of them. While I did believe that the market was extremely speculative when Nasdaq was at 5000. I didn’t think that it would come all the way down to 1400.” Chaudhri has stayed invested in many technology businesses through the collapse, with the idea that a recovery will happen some time in 2002.
He sees an opportunity ahead. “It’s human nature to want to invest more money when it looks like the market is going up every day, and not invest when the market looks like it’s going down. To make money you’ve got to fight that. The reason that everybody is not rich is because making money fundamentally means going against what everybody else is doing.” He will be helping intrepid investors make some bets on the tech sector now that it’s in the dumps.
Certainly neither hedge fund investing nor hedge fund management is for the faint of heart. Chaudhri quips, “Nobody puts a gun to anybody’s head and says you have to run a hedge fund. People who volunteer to run hedge funds obviously feel that they have the temperament to handle the stress. Some people desire that level of intensity.” He admits that it’s human nature to be personally affected by the swings of the market, but that you can’t let it cloud your judgement.
Interest in hedge funds has declined recently, for obvious reasons, and some of Chaudhri’s investors have gotten out. But most have stuck by Digital Century, which manages just under $200 million, hoping that Chaudhri’s prediction of a recovery comes true.
Of course the relatively unregulated world of hedge funds, diverse in strategy formulas and investment focuses, has seen its share of scandals and meltdowns over the years. Recently, a firm called Long-Term Capital Management made an extremely leveraged bet on bonds and lost billions for investors — and it’s not the first time a hedge fund has imploded. Unlike mutual funds, hedge funds aren’t required to report their performance to the SEC, so hedge fund managers have latitude for risk taking and creative strategies that sets them apart. As a result of this minimal regulation, the hedge fund world is filled with both savvy managers and charlatans alike.
“You occasionally have people who have taken too many risks and have failed,” Chaudhri says. “If you use a lot of leverage and you’re wrong, you can be decimated.” But Chaudhri maintains that in general hedge funds have performed better than mutual funds — something hard to verify because many hedge funds operate below public radar screens. In the end it’s all about knowing what you’re doing — for hedge fund mangers as well as their investors. Beyond the risks, the possible upside is huge. It comes down to numbers. “The sky’s the limit,” he says.
But to Chaudhri, life and society is more than just business success and numbers on Wall Street. “To be full fledged participating citizens of this great country, it’s not enough to wake up every morning and do a good job as software engineers or venture capitalists,” he says. “As the Indian Diaspora matures in terms of its own self awareness, we are getting to the point where we will express ourselves in art and culture, and philanthropic money will get directed toward these kinds of goals.”
Chaudhri is himself a collector of Indian art, and the IndoCenter — through its own New York gallery — has done a number of thematic exhibitions showcasing a wide spectrum of contemporary South Asian artists. The latest is a fascinating exploration of the depiction of women in Indian calendar art since the 1960s.
Chaudhri’s idea, in the end, is to establish an artistic voice for South Asians in America. In some sense his “double life” highlights the importance of a world beyond business. Though the essence of immigrant entrepreneurship has given Indians a razor sharp focus on the pursuit of business goals, there is room for siliconindians outside business, to profoundly influence all aspects of American culture. si
