How Bill Perkins' Fund Survived a 50 Percent Plunge

In a recent interview, the founder of Skylar Capital detailed his journey from the trading floor to running his own fund, including a period where the firm nearly went to zero. Perkins, a noted high-stakes poker player and entrepreneur, advocates for a life of memorable experiences over hoarding wealth, a principle that also defines his risk-tolerant approach to markets.

"I’m a big risk-taker. I’m always going for the higher rung," Perkins said in an interview with The Wall Street Journal's Gunjan Banerji from his Austin, Texas, compound. "I’ve been very comfortable with the ups and downs."

This comfort was tested when his energy-focused hedge fund, Skylar Capital, faced a catastrophic loss in its early years. Perkins recounted a period where the fund was down more than 50 percent, forcing him to scramble to meet margin calls. "I’m trying to pass the hat around to my friends to meet margin calls," he explained.

The experience highlights the volatility inherent in Perkins' strategy, which accepts massive swings in net worth as a side effect of aiming for high returns. For many, such a drop would be a career-ending event, but for Perkins, it was a lesson in resilience. "As long as you stay in the game, the returns will come," he said.

A Philosophy of Risk

Perkins' career began on the high-energy trading floors, an environment he felt immediately drawn to. His core financial belief, which he detailed in his book "Die With Zero," argues for spending and giving away wealth during one's lifetime to maximize personal fulfillment.

This philosophy extends directly to his investment strategy at Skylar Capital. Unlike traditional fund managers who prioritize wealth preservation and steady, incremental gains, Perkins embraces volatility. "A lot of people are deathly afraid of losing all their money," he noted. "I’m like, eh, so be it." This attitude allows him to take concentrated, high-conviction bets that can lead to either spectacular gains or gut-wrenching losses.

The Brink of Zero

The most severe test of this philosophy came during the second or third year of Skylar Capital's operation. A major position moved against the fund, leading to a drawdown that exceeded 50 percent.

Faced with mounting margin calls, the fund was on the verge of collapse. Perkins described the process of survival as methodically "chopping wood"—reducing the position size to manage the immediate risk and stay solvent. By successfully navigating the crisis without being forced to liquidate entirely, Skylar Capital was able to recover and eventually thrive, validating Perkins' belief in staying in the game above all else.

This article is for informational purposes only and does not constitute investment advice.