Hedge funds are moving from the fringes of investments to the core. Anyone who is heading into an asset management/trading/capital market sales related activity will find themselves interacting with hedge funds, either as investors, marketers, counterparties or potential hedge fund managers. Although covered, the focus is not only on classic “value equity” investing, but covers the broad range of other hedge fund strategies. The course will focus on the evaluation of managers and trades involved in Directional Investing (equity and macro), Event Driven Strategies, Arbitrage and Relative Value Strategies. Exposure to basis risk, leverage and hedging strategies will also be reviewed. This is not a course on the role of hedge funds in financial markets, nor does it deal with the history and of hedge funds, excepts as the history relates to the risk/return characteristics of major strategies.
This class uses a combination of instructor lectures, class discussions and guest lectures to teach students the methodologies of hedge fund analysis and investments from the perspective of investors considering investing into hedge funds, as well as portfolio managers running actual hedge funds. The course will have a particular focus on the limitations and pitfalls of applying traditional security analysis to investments into hedge funds, and the drivers of success in hedge funds.
Course participants will have guest lectures from active investors and portfolio managers in the field. The course is “free flowing”. While there are defined lectures, students should also expect current, live, market conditions to form an important part of the class discussion.
The Final Project
For the final project student teams will visit various actual (New York Area) hedge funds and perform a mock due diligence on the fund and their investments, culminating in a “buy sell or hold” recommendation on the fund. This will give participating students a chance to interact with a range of funds, and their managers. For those unable to attend any fund a take-home option will also be available.