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says, "We actively manage the entire portfolio. When we come up with an idea we like, we give the appropriate portfolio manager the option of taking it on his P&L [profit and loss statement] or leaving it with us. We work closely with our portfolio managers to determine their best ideas, set target and stop-loss levels, and determine appropriate position sizes."

A corporate culture has been established and is maintained as every portfolio manager can veto a prospective employee before he or she is hired. "We hire people who have a quiet intensity—not screamers; who compete with the markets, not with each other; and who take responsibility for their positions. The portfolio managers have their names assigned to a stock, thus giving them profit and loss responsibility." Authority is shared; all positions are discussed with either himself or Rieger.

The reward system is based on the performance of each portfolio manager's positions plus a bonus pool for the entire firm based on that year's performance.

Kingdon gets a great deal of satisfaction from seeing individuals within the firm develop. For example, Rieger joined the firm in December 1992 as an experienced analyst with no portfolio management or administrative experience. Kingdon says he has developed into a superb portfolio manager who has mentored several outstanding analysts in the firm and is his right-hand man today.

Four funds are traded: three for U.S. high-net-worth individuals and one for non-U.S. citizens. Kingdon Associates and Kingdon Partners are for U.S. investors. Their investment policy is nearly identical except that Kingdon Partners, the fund managed for investment professions, may not buy hot new issues. Kingdon Offshore NV is not subject to U.S. income taxes on capital gains. The fourth fund, Kingdon Family Partnership, began trading on July 1, 1993. There are over 300 investors in total.

Kingdon says that endowment allocations have become a bigger part of their business. The offshore fund (where endowments fall) is the largest segment. Investors in the offshore fund (including all endowments, pension funds, and non-U.S. investors) are not generally subject to U.S. taxes. As a result, Kingdon does not try to be tax efficient. According to the 1999 NABUCO study, public records indicate that those endowments that allocate to Kingdon include Bowdoin College, Colby