Thu, May 17, 2012
A A A
Welcome Guest
RSS RSS icon
Get FREE trial access to our award winning publications
Alternative Market Briefing

Operational due diligence is a source of alpha

Wednesday, February 15, 2012

amb
Stephen Brown
Bailey McCann, Opalesque New York:

Stephen Brown is one of the world’s leading hedge fund scholars. He is a professor of finance at New York University’s Stern School of Business and was recently interviewed by Greg Despolberch for Opalesque TV. He shares new research that shows operational due diligence can be a form of alpha for funds.

He explains that when he started as a pension fund manager, few investors were focused on operational due diligence when they were looking to get involved in the hedge fund space. When he started to examine this trend he uncovered several macro trends that define how investors approach risk and operational risk in the hedge fund space. His findings show that while investors understand what operational risk is and how it differs from other types of risk, ways of measuring it were lacking.

"There are three major challenges to defining operational risk: number one - its multidimensional characteristic - people, systems can fail in many different ways. Number two is the data - getting information on operational characteristics is difficult. The third and most important issue is the distinction between operational risk and financial risk. My research has clearly shown that operational risk is more predictive of failure than is financial risk. Financial risk is a symptom rather than the disease, and the disease is operational risk," Brown said......................

To view our full article Click here

Banner
Today's Exclusives Today's Other Voices Banner More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. People – Hatteras Funds expands investment management team, Harcourt Investment Consulting appoints new head of alternative investments, Commonfund recruits industry veteran Brett Lane to its hedge fund group[more]

    Hatteras Funds expands investment management team Hatteras Funds, a boutique alternative investment specialist providing unique alternative investment solutions for financial advisors and their clients, announced that Thomas Riegert, CFA, has joined the firm as Associate, Portfolio Manag

  2. Institutions – Update: CalPERS commits $500m to managed account overseen by Blackstone, Euro 14bn pension fund for Philips to drop private equity, hedge funds, Fund of hedge fund managers pushed out by UK schemes’ direct investment, Houston Municipal puts $85m with alternative managers[more]

    Update: CalPERS commits $500m to managed account overseen by Blackstone From Reuters/PEhub.com: CalPERS, the biggest U.S. public pension fund, will commit $500 million to a managed account overseen by Blackstone Group LP, the world’s largest private equity firm, according to details prov

  3. Kyle Bass’ Japan macro fund down 29% for April[more]

    From Valuewalk.com: Kyle Bass is the founder of Hayman Capital. He is famous now for buying Greek Sovereign Credit Default swaps at $1,000 for $1 million of the price. He Supposedly made a 650x return for each swap which he bought. He was also early in the subprime game and shorted that successfully

  4. Opalesque Exclusive: Park Hill to represent new credit hedge fund manager MeehanCombs[more]

    From Komfie Manalo, Opalesque Asia: Global placement agent Park Hill Group, which has $126.4bn of commitments for its private equity and hedge fund clients, has selected MeehanCombs LP as the credit opportunities hedge fund manager

  5. A SQUARE 31 Mar 2011: Infrastructure funding needs worldwide, benefits to investors, implementations difficulties, and lessons learn from the financial crises. An analysis by Jay A. Yoder, CFA, Partner and Head of Real Assets at Altius Associates.[more]

    Infrastructure funding needs worldwide, benefits to investors, implementations difficulties, and lessons learn from the financial crises. An analysis by Jay A. Yoder, CFA, Partner and Head of Real Assets at Altius Associates.