Tue, Aug 4, 2015
A A A
Welcome Guest
Free Trial RSS
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

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Activist News - Celgene says patent-fighting hedge fund manager wants to short its shares[more]

    From Reuters.com: Celgene Corp, one of the world's largest biotechnology companies, has accused U.S. hedge fund manager Kyle Bass of attempting to profit from his attempts to wipe out several major drug patents through his Coalition for Affordable Drugs. The company asked the U.S. Patent and T

  2. Einhorn's Greenlight Capital hedge fund slumps 6.1 percent in July[more]

    From Reuters/Thefiscaltimes.com: Hedge fund mogul David Einhorn's Greenlight Capital slumped 6.1 percent in July and is now down 9 percent for the year after gold, one of the fund's top holdings, tumbled to five-year lows last week. Greenlight notified clients of its returns late on Friday, ac

  3. Performance - Some hedge fund small-cap energy stocks have been free falling, Dan Loeb's simple strategy destroys the market, Baupost lost 1.4% last quarter as energy bargains proved elusive[more]

    Some hedge fund small-cap energy stocks have been free falling From Marketrealist.com: According to a July 28, 2015, Bloomberg article, there was a 34% fall in small-cap energy stocks over the past three months. These shares are tracked by the Russell 2000 Energy Index. Small-cap energy

  4. Legal - Hedge funds hit Rothstein Kass with $75m malpractice suit, JPMorgan questioned on private bank’s hedge fund disclosures, Kijani fund, seized by regulators in Cayman Islands, spotlights risks in lightly regulated market[more]

    Hedge funds hit Rothstein Kass with $75m malpractice suit From Law360.com: Two investment funds have sued Rothstein Kass & Co. PC for at least $75 million, claiming the New Jersey auditing firm committed accounting malpractice by failing to properly scrutinize overblown valuations of the

  5. Assets - Hedge funds are getting smoked by the commodities slump, Global ETF assets could more than double by 2020[more]

    Hedge funds are getting smoked by the commodities slump From Businessinsider.in: The collapse in commodity prices has burnt another hedge fund. Vermillion, a commodity hedge fund backed by Carlyle Group, has seen its flagship fund's assets fall from nearly $2 billion to less $50 million,

 

banner