Institutional Investor's Alpha Magazine - September 2008 - (Page 52)

W HEN SHE WAS A 19-YEAR-OLD ECONOMICS major at Columbia University, Andrea Feingold, now 44, won an internship in the bond market research department at Salomon Brothers during the ﬁrm’s testosterone-fueled heyday of the 1980s. In 2001, after a stint as co-head of the high-yield group at bond giant Paciﬁc Investment Management Co. in Newport Beach, California, Feingold and business partner Ian O’Keeffe opened Boston-based credit specialist hedge fund Feingold O’Keeffe Capital with $10 million. The ﬁrm’s assets have since grown to $1.3 billion, powered by a net annualized return of 10 percent. Renee Haugerud traces the roots of her knack for futures and options trading to an airplane ride with her sheriff-farmer father over the cornﬁelds of Minnesota when she was ﬁve. By the time she was ten, he had taught her all about put and call options. Haugerud, 53, went on to become a successful trader at food and agricultural conglomerate Cargill, the second-largest privately held company in the U.S. In 1999 she launched New York–based Galtere, a global macro commodities hedge fund that has produced an annualized 17.75 percent return since inception and now has $2.1 billion in assets. Then there’s Jane Siebels, who’s out to save the world with her hedge fund. Bahamas-based Green Cay Asset Management has $300 million under management and invests in socially responsible emerging-markets companies — shorting those that don’t measure up. Siebels, 48, is on a self-imposed dual mission to improve working conditions in the third world as she produces alpha for her investors. When she pitched the strategy a decade ago, her former boss, famed global investment manager Sir John Templeton, found it compelling enough to become one of her ﬁ rst investors. The Green Cay Emerging Markets Fund has produced annualized net returns of 16.33 percent since its 1997 inception, easily outperforming the MSCI emerging markets index, which was up 11.81 percent a year for the same period. Feingold, Haugerud and Siebels represent a largely undervalued and untapped source of alpha, as women manage a tiny percentage of hedge fund assets. Not surprisingly, these alpha females — women who are so good at running hedge funds that their returns are often better than those of their male competition — have had to crash through a multitude of barriers. When it comes to investment management, sexism is alive and well. Academic research has shown that all things being equal, investors will choose a man over a woman to manage their assets. Women have also had to overcome a natural reluctance to display marketing brawn. “Women don’t seek out opportunities to selfpromote,” says Elizabeth Flisser, until recently the president of Capital Z Investment Partners, a private equity ﬁrm based in New York that invests in and takes minority positions in hedge fund start-ups. “Women tend to keep lower proﬁ les,” adds Kathryn Crecelius, CIO of the $3.1 billion endowment at Johns Hopkins University in Baltimore. That may be changing lately, however, as more woman-owned ﬁ rms hire marketing and investor relations professionals. Next comes the motherhood argument. For decades women were taught that they could not have it all. Today, 52 • INSTITUTIONAL INVESTOR’S ALPHA • SEPTEMBER 2008 although some top managers choose to bypass or delay motherhood, a number of women really are doing it all — managing a hedge fund and raising three or four children. They have discovered that, unlike a career in investment banking, running your own hedge fund allows for some ﬂexibility. But these uncommon women — Feingold, Haugerud and Siebels — aren’t so uncommon anymore. “When we started in 2001, there weren’t many women managers,” Feingold says. “That’s really changed. There are more women actually doing the investing and managing.” As female-driven funds have grown in size and number, many of the women running them have begun working more aggressively to attract institutional assets. It may be the perfect time to do so: Many pension funds and endowments looking for safe harbors in the market storm of the past year have been turning to hedge funds that are registered with the Securities and Exchange Commission, have low or no leverage and can deliver good, consistent returns with no surprises. Most woman-run funds ﬁt that description, and they may offer other beneﬁts as well. Although most of these women believe that their investment acumen is no different from their male counterparts’, they claim unique characteristics that add value. Among them: modesty, calmness, honesty, intuition, aversion to outsize risk — and a tendency to use leverage at about half the industry average. “I think there’s something useful about humility; it comes easier to women and is helpful in minimizing losses,” says Karen Finerman, who runs a special-situations, long-short hedge fund with partner Jeffrey Schwarz. The fund, New York–based Metropolitan Capital Advisors, has $350 million in assets and has produced 13.5 percent annualized returns since its 1992 inception. Merely having women on a team seems to add value. “The most important thing for a trading team is diversity,” asserts Haugerud, who recruits females: Six of the 12 investment professionals at her ﬁrm are women. Other women managers have taken a similar approach. Finerman’s three dedicated analysts are all women; Feingold has three female investment professionals on her team of 12. “The women who are in the hedge fund industry are among the sharpest people I have come across,” notes John Casey, principal of Casey Quirk & Associates, a Darien, Connecticut–based investment consulting ﬁ rm. “I think there’s tremendous progress being made

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - September 2008

Institutional Investor's Alpha Magazine - September 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Culling the Herd The Good Guys: Ending the Cycle Interview: Press Credentials Cover Story: Rethinking Chris Hohn Strategies: At the Edge of the Earth Profile: Alpha Femals Strategies: Tails, You Lose Research Center: The Top Equity Trading Firms Alpha Bytes: The Light Is On Unhedged: Commentary: Not-So-Dire Diagnosis

Institutional Investor's Alpha Magazine - September 2008

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