|This course will provide a comprehensive overview of hedge fund investing: structural industry overview; analysis of historical industry performance and benchmarks; fund structure; investor eligibility criteria; terms and conditions of investing including fees and liquidity; major hedge fund strategies such as long/short equities and credit, activist investing, distressed corporate debt, equity derivative and fixed income arbitrage, event driven investing, asset based lending, and macro; portfolio construction and risk management; counterparty risk management; structure of leverage and margin; hedge fund operations and internal controls – valuation methodology, compliance, background investigations; government regulation; sources of information about the industry; strategic industry developments including monetization of alternative investment firms.
The course is designed for highly motivated MBAs (expected work load 5 - 10 hours per week) with primary interest in pursuing an investment related career. The format of the class will typically include: 1/2hour interactive discussion of readings and group presentations; 1 ½ hour lecture; plus 1 hour presentation by invited guest speaker, an industry expert on the topic of the week.
The class will be treated as a virtual Investment Committee. Each student will be expected to perform as they were in the real world in terms of research and preparation and quality/sophistication of questions and insights, as well as challenges to the conclusions or approaches suggested by other members of the Committee. There will be extensive readings for the course, in much the same way as there is information overload in the investment world. The challenge for the student will be to digest/skim all of the materials, develop an understanding of the larger context of the relevant issues, and then identify the critical information. This is a concept based course; there will be no tests based on memorization or derivation of formulae.
The ACCESS Program offers a limited number of enrolled students the ability to speak with senior investment professionals from a number of leading hedge funds.
These calls will be made during January and February 2013. Each participating industry professional has agreed to a 45-60 minute phone call (at a time and date convenient for them) with a student from the class. The focus of these call include: career path and attributes critical to success, assessment of the current market environment, attributes of a successful investor, and recommended reading.
Student selected for participation in the ACCESS program will be based on the quality of class participation and weekly Individual Mini-Papers during the first few weeks of class.
In order to participate in the ACCESS program, students must also commit to and write a memorandum to the Investment Committee (e.g., all students in the class) describing the call. The format for these memorandae will be described to students invited to participate in this program. These papers will be compiled and shared with all of the students in the class.
While there is no grade or extra credit for participating in the ACCESS program, participating students may substitute the ACCESS program memorandum for one weekly assignment (weeks 4 – 10).
|CoursePack, specific required set of articles/readings, and books, plus broader bibliography of suggested readings that are interesting and provide perspective. Overall, eclectic set of readings including academic empirical articles related to hedge fund performance, measurement bias, and return attribution; memorandums by industry experts, Wall Street firms, regulators, and corporations relating to: effectiveness of government regulation, case for hedge funds, standards for investment and non-investment due diligence; specific hedge fund Offering Memorandum; books on hedge fund strategies/investing, profiles and philosophies of famous and successful alternative investors, risk management and Black Swan events.
Required Text Books:
- Handbook of Hedge Funds. Lhabitant, Francois-Serge. John Wiley & Sons, Ltd., 2006, ISBN 13 978-0-470-85667-3 (HB)
- Distress Investing – Principles and Technique. Whitman, Martin J; Diz, Fernando. John Wiley & Sons, Inc., 2009. ISBN 978-0-470-11767-5
- The Black Swan – The Impact of the Highly Improbable. Taleb, Nassim Nicholas. Random House, Second Edition, 2010, ISBN 978-0-8129-7381-5
- Hedge Fund Operational Due Diligence – Understanding the Risks. Scharfman, Jason A. John Wiley & Sons, Ltd., 2009, ISBN 978-0-470-37234-0 (cloth)
|Class participation (including attendance); since the class will be treated as an Investment Committee, it is expected that all questions, discussions, and presentations will reflect preparation, professionalism, and precision: 20%;
Weekly 1 page individual mini-paper discussing single topic of interest or insight from readings: 30%;
Two group projects on specific topic such as analyzing/recommending a specific investment opportunity, that includes both a long and a short position; and building an optimal portfolio of hedge funds, maximum of 10 pages plus class presentation of one project: 25 %;
Final individual paper on (approved) topic of choice such as evaluation of specific hedge fund investment, risk management of complex portfolio, evaluation of financing/leverage structure, maximum of 10 pages: 25 %.
Course cannot be taken pass/fail. No auditors allowed.
During the Winter 2013 cycle of the course, I have made arrangements for students to have access to one of the hedge fund industry’s leading analytics package, PERTRAC Analytics (www.pertrac.com) as well as to the HFR Academic database comprised of thousands of hedge funds to be used for one of the group projects and, optionally, in the final paper. There are four computers with the PERTRAC software/HFR database loaded: two in the Gleacher 110 Computer Lab and two in the Harper C50 Computer Lab.
|REQUIRED (Strict): Bus 35000, 35100, and 41000 (or 41100). Recommended: Bus 35120, 35130, 35150, 35152, 35200. However, I have been very liberal in granting exemptions reflecting work experience and personal knowledge.
Note: Class will meet in Gleacher Lecture Hall 404.
Description and/or course criteria last updated: 12/4/12
Description and/or course criteria last updated: 06/12