Institutional Investor's Alpha Magazine - September 2008 - (Page 55)

Women Hedge Fund Managers Haugerud’s belief in the added value women bring to the investment arena is backed up by a study by professors Brad Barber and Terrance Odean of the University of California. The research, which was published in the 1999 paper “Boys Will Be Boys: Gender, Overconﬁdence and Common Stock Investment,” found that overconﬁdence is ultimately what leads men to fail at investing. Barber and Odean determined, in a sample of 35,000 discount brokerage accounts, that men traded 45 percent more than women, lowering the men’s investment returns by 93 basis points compared with those of the women. “Overconﬁdence causes people not to recognize risk and to use more leverage,” explains Odean, who a decade later stands by the pair’s conclusion. “People have not changed.” Women also outperformed men in a study by Brooke Harrington, an economic sociologist who holds a doctorate from Harvard University. Harrington found that mixed-sex teams delivered the best returns. She looked at the annualized returns of about 700 investment clubs in the U.S. from 1986 to 1997 and compared them with those of the Standard & Poor’s 500 index. The clubs were either all male, all female or mixed. The female clubs beat the S&P by 28 basis points while the men-only groups performed 56 basis points below the index. The coed groups outperformed the S&P by 198 basis points. “You have an additional layer of checks and balances when you have diversity on the senior management team,” says Theresa Welbourne, an adjunct professor of organizational behavior and human resource management at the University of Michigan and the University of Southern California. “People are more likely to question each other and have a robust dialogue and come up with better decisions because of that.” Maxam CEO Manzke, who began researching hedge funds after she founded Tremont in 1984, says she is not surprised by such research but is mystiﬁed by how little it seems to matter. “Guys blow up, lose all their investors’ money, start up a new fund and get people to invest again,” she says. “I don’t get it.” Neither does Green Cay founder Siebels. After the emerging-markets meltdown in the late 1990s, several hedge fund managers closed their funds to reset their high-water marks. “I wouldn’t do that, and I think most [other] women wouldn’t either,” asserts Siebels. In 2006, at Templeton’s suggestion, legendary hedge fund manager Julian Robertson Jr. invested in Green Cay. Robertson also invited Siebels to participate in his twicemonthly luncheon meetings, nicknamed “The Investment Group,” at his Tiger Management Corp. ofﬁces in New York. (The two other women who have standing invitations are Anne Dias Griffin, founder of Aragon Global Partners in Chicago, and Joanne Stone Morrissey, co-founder of New York–based Firemark Investments.) Most women who work in hedge funds hold positions in marketing, client services and investor relations. It seems natural, then, to expect the women who do manage assets to trumpet their achievements. Siebels says she realized how much less outspoken she was than male rivals when she hired a marketing consultant. “He told me, ‘You are not nearly as arrogant as a typical hedge fund manager,’” and chastised her for being too selfcritical when writing investor letters. “He told me not to do that.” It was Nancy Havens’s investment acumen that prompted Bear, Stearns & Co. to make her its ﬁ rst female employee-director in 1992 (she started at the now defunct investment bank as a merger arbitrage analyst in 1979). “I subjugated the woman stuff until 1992,” Havens recalls of her former reticence to highlight her gender. Once she became a director, however, she began to use her position to make sure women were treated fairly. When she left in 1995 to start her own merger arbitrage and distressed-investing ﬁrm, New York–based Havens Advisors, Havens, who has a Harvard MBA, didn’t focus on self-promotion — a decision she has come to regret. Despite delivering annualized returns of about 10 percent in her ﬂagship Havens Partners, her ﬁ rm has only $200 million under management, prompting Havens recently to hire a marketing professional. Feingold, the Boston-based manager, has relied for more than a year on a full-time marketing executive, which has allowed her to concentrate on portfolio management. She has been in the thick of the credit crunch and — at the request of an investor — in January launched the Feingold O’Keeffe Distressed Loan Fund with $70 million in assets. That fund is up almost 4 percent, and the ﬁ rm’s ﬂagship Feingold O’Keeffe Capital I Fund was up 2 percent in the ﬁ rst half of 2008, compared with –1.28 percent for the Merrill Lynch high-yield index. Feingold, a marathon and triathlon competitor who has climbed Mt. Kilimanjaro, has built “The women in the hedge fund industry are among the sharpest people I have come across.” — JOHN CASEY, CASEY QUIRK & ASSOCIATES a proprietary database to help sort loan market opportunities that go largely unpublicized, unlike betterknown megadeals. “We are looking for underfollowed ideas where there is little or no Street research and our experience gives us an edge,” she says. Sometimes the marketing lesson learned is simply not to give up. When Joanne Egrovich’s partner pulled out of their Greenwich, Connecticut–based, $650 million Heirloom Capital in early 2006, she was forced to close it and was brieﬂy at a loss as to what to do next. But the SEPTEMBER 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 55

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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