The Buy Side - Hedge Funds And Pension
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The Buy Side - Hedge Funds And Pension Presentation Transcript

  • 1. The Buy Side - Hedge Funds and Pension Funds Jennifer Fraser Commodity Portfolio Manager Ridgefield Capital
  • 2. My Background- Commodity Strategist and PM
    • 2005-2009 - Ridgefield Capital Asset Management (Multi- commodity and basic materials equity hedge fund).
    • 2002-2004 - Centaurus Energy (Natural Gas Hedge Fund- commodity only).
    • 2001-2002 - Tudor Investments – Ospraie Funds (Multi- commodity and basic materials equity hedge fund).
    • 1997 – 2001 - Enron Corporation.
    • MBA (University of Toronto, 1997).
    • MA - History (Université de Montréal, 1994).
    • BSc - Microbiology and Immunology (McGill, 1990).
  • 3. What does a PM do?
    • They DO ideas: Generate investment ideas / themes then structure appropriate vehicle for the investment (fixed price, time spreads, options, swaptions, basis spreads, cross-commodity).
    • They DON’T trade: Trading / execution is a utility function and trading team compensation reflects it. Trading desks execute shopping lists on the buy side. ( and it’s almost all electronic).
  • 4. How did I get here: Ski Instructing/ Waitressing to Asset Management
    • 1990 = RECESSION = no jobs - so you do what you need to do.
    • Enron – The good things: largest natural gas marketer in North America – At one point owned 20% of pipeline capacity and moved 20% of natural gas – learned industry bottom up and did every grunt job there was.
    • Fell on my face more times that I can count – but you have to get back up.
  • 5. Following the $$$: Pay Scale and Compensation
    • Hedge funds: PM gets 10% - 30% of upside. i.e. 100$ mln AUM makes 25% or 25 mln$- PM collects 5$ mln = rewards short term performance.
    • Pension Funds: Lower comp in the front years but increases over time = rewards long term performance.
    • Analysts and associates make 85$K to 150 K$/yr – with bonus solely at discretion of PM. i.e I pay you out of my bonus pool.
    • Analysts and associates typically cost money for 2-4 years – errors, learning curve and execution errors.
  • 6. Getting in the door:
    • Distinguish yourself in a particular industry / sector- anyone can do comps- not everyone can bring an idea and or insight to the table.
    • Work for a specific basic resource company – XOM, CVX, TOT, ECA etc –
    • Build a network in the industry not just a list of ibanking analysts and associates.
    • Know your industry inside and out : production, transport, consumption, regulation, etc.
  • 7. Random Events - Hurricanes
    • Waves not wind do the damage- water is heavy.
    • Storm damage is often underestimated.
    • This is where knowing your pipes comes in handy.
    • Proactive instead of reactive.
  • 8. Getting Natural Gas and Crude Oil to Market
  • 9. Gulf of Mexico – Nat Gas Infrastructure
  • 10.  
  • 11. ENB Gathering System: Direct Hit By Ike and Gustav IKE Gustav
  • 12. GOM: Major Platforms
  • 13. Hurricane Flooding: Knocks out Onshore Processing
  • 14. Closing thoughts: Commodities vs Equities
    • Pure play – no more guessing about management.
    • There is no equity story without a commodity story – learn the industry from the inside.
    • Get “your hands dirty” with actual product.
    • Far too many equity analysts can’t find Cushing, OK or Erath, LA on a map.
  • 15. Contact Info:
    • Email: jenfraser1@gmail.com