Press
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Florida Hires Hedge Fund Expert to Help in Probe
Mon Feb 25, 2008 5:28pm EST
BOSTON, Feb 25 (Reuters) - Florida has hired two experts, including one with a long track
record in hedge funds, to examine how a local government investment pool was nearly wiped
out late last year, state legislators said on Monday.
Tanya Styblo Beder... will investigate the Florida Local Government Investment Pool to make
sure the fund is not vulnerable to another run, said Marco Rubio, speaker of Florida's House
of Representatives.
Late last year, the fund lost more than $10 billion as news circulated that it owned risky
securities that had been downgraded in the wake of losses on mortgage market securities and
amid worries about broader housing market losses.
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Florida House picks 2 to evaluate pool
Posted: February 25, 2008, 3:57 PM EST
The Florida House of Representatives hired risk management consultant SBCC Group and
Tew Cardenas, a law firm with expertise in financial transactions, to evaluate the
Florida State Board of Administration’s Local Government Investment Pool, said Jill
Chamberlin, communications director of Florida House Speaker Marco Rubio. State Rep.
Carl Domino, a longtime investment manager, will lead the House review, which is
designed to determine if new legislation “is needed to support best investment
practices,” according to a statement from Mr. Rubio.
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Equity Analysts Facing New Quant Challenge
May 31, 2007- Dane Hamilton
NEW YORK (Reuters) - …At an increasing number of Wall Street
investment banks, hedge funds and elsewhere, computers are
churning out investment analyses culled from enormous pools
of data.
"Given the same set of factors, it will always produce the
same result," said quant industry veteran Tanya Beder of
quantitative analysis. "Its signals are pure and systematic."
Beder, who built the quant trading division of top-performing
hedge fund Caxton Associates LLC and was chief executive of
Citigroup's Tribeca Global Management in 2006, estimates that
quantitative analysis and trading "drives one-third of the
market" on any given day....
Hedge funds, which are often early adopters of new investment
methods, are spurring the development of quantitative strategies,
which trade using mathematical, or algorithmic, models. Many such
strategies were spawned at the internal trading desks at banks,
notably Goldman Sachs.
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February 12, 2008
...a new fund-of-funds manager Lasair Capital will invest in hedge funds,
infrastructure and timber securities for institutional investors…GE Asset
Management reportedly is backing Lasair Capital. GE Asset’s former CEO, John
Myers, is advising the new firm, along with Tanya Styblo Beder, Chairman of SBCC...
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Excerpts From “One-on-One” Featured Interview:
FEN: How do you define risk?
Beder: Risk is what a rational investor should seek at the right price. Good risk
selection follows a few tenets. The first tenet is that you must properly define the
risk in order to limit the probability of surprises. The second is that you size it
properly. The third is that you are compensated for it properly. Some people think
that risk should be eliminated. I disagree. Risk should not be hunted down and
exterminated. Instead, an investor should take risks he or she can afford at the
right price.
FEN: Are there particular events or controversies that changed the way you think
about risk?
Beder: I have a lot of religion that one size doesn’t fit all. I spent 13 years of
my life as a consultant, cleaning up financial train wrecks. These include what
happened with the derivatives and structured securities losses at many Wall Street
firms during the Fed rate hikes in 1994, working through the Orange County disaster,
working through the downfall of the Asian currencies in 1997 and 1998, and the operational
risk failures that have plagued many financial firms.
All of these events were quite different but they were all important in terms of learning
about risk management. One key lesson is that managers should not feel they can sleep at
night just because someone calculated some risk numbers. Understanding what the numbers
do—and what the numbers do not do—is critical in avoiding surprises.
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Blank Cheques and Balances
Sep 28th 2006 | NEW YORK
From The Economist Print Edition
Lenders to hedge funds need to think harder about the risks
EIGHT years ago, when Long-Term Capital Management (LTCM), a fabulously
well-connected Connecticut hedge fund, was holed by an explosive mix of
bad bets and borrowed money, the Federal Reserve was forced to bail it
out. Its brokers, who had virtually written it a blank cheque, were in
a panic: of LTCM's $125 billion in investments, $120 billion was backed
by borrowing.
In September, news that Amaranth, another Connecticut hedge fund, lost
$6 billion, 65% of its value, in less than a month caused barely a ripple
in financial markets. Banking supervisors … are urging regulated banks...to
be more vigilant about the risks being taken…. prime brokers must decide how
much to lend against a borrower's collateral. Then they must monitor this
collateral so that, should it deteriorate, brokers can demand more of it
or call in loans.
Both tasks are tricky. For one, hedge funds routinely use several prime
brokers—and each broker sees only the securities he lends against. Hedge
funds also increasingly invest in esoteric derivatives that are often illiquid
and difficult to value. Moreover, the “quality” of collateral is not static.
It deteriorates—and lending must be reduced—if, say, a trade or strategy is
popular with other investors (a “crowded trade”); liquidating such trades in
times of market stress is exceedingly difficult.
This means, says Tanya Beder, an investment-management expert who resigned as
the head of one of Citigroup's in-house hedge funds two weeks ago, that big
prime brokers can benefit from “informational economies of scale”: they see
more data and so can better discern market trends. Still, the sophisticated
computer models that banks use to crunch data have limits; a model is only as
good as the inputs it gets.
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Book Cover
Tanya Styblo Beder Profiled
in How I Became A Quant:
Insights from 25 of
Wall Street's Elite
Downloadable PDFs
Women in Trading 2007:
The Beder Approach
Beder on Fast-Track at Citigroup
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