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Opalesque Exclusive: Harris Alternatives` success story using active short sellers as a hedge to event risk Matthias Knab reports "live" from Dubai: Ronald Rolighed, Partner and Managing Director of Business Development at Chicago-based Harris Alternatives LLC says "event risk will cause the most pain if ignored...". Rolighed thinks that traditional risk management on the fund manager level will always be incomplete. In his view, a hedge fund manager's risk management is rather a qualitative and not really a quantitative strategy. For over a decade, Harris Alternatives has used dedicated, active short sellers as a hedge to event risk for its portfolio of hedge funds. Dedicated short sellers would display "significant negative correlations to traditional absolute return strategies," according to Rolighed.

At any time about 10% to 15% allocated to best in breed dedicated short sellers. The allocation varies as Harris assesses on a month-by-month basis the composite directional exposure built up by the other managers.

This short portfolio of short sellers produced a monthly return net 0.03%, a monthly alpha (versus S&P500) of 1.12% at a monthly beta of -1.05. As a whole, the short (managers') book returned "in times of need":

Q1 94: 9% Q3 98 21.1% Q3 2001 17.3% Q2 2002 13.3% Q4 2007 (inaudible)

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