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New Perspectives

A Champion for Diversity

Former Illinois Senate President Emil Jones, Jr. shares how he managed to pass legislation mandating the inclusion of diverse-owned investment firms among the state's selected investment managers. One of the great champions for diversity, Senator Jones learned the inner workings of the state pension systems and their allocation processes to successfully craft regulations that would create inroads for qualified investment firms that were previously denied such opportunities.

More 'Jackie Robinson Moments' for Diverse Managers Ahead

Looking to the future of the industry, John W. Rogers Jr., Chairman, CEO & Chief Investment Officer of Ariel Capital Management, hopes to see more universities, hospitals and other private institutions working with diverse money management firms. In this installment of Perspectives, NAIC’s online video series, Rogers surmises that if more of the non-profit institutions begin to live the values they claim to espouse with regards to inclusion, they would embrace inclusion for diverse firms beyond the typical areas of construction and catering and the like to include such professional services as information technology, advertising, accounting, legal and money management.

Incubating Diverse Professionals

Historically, there have been very few diverse professionals sitting on trading desks, which are often the incubator for future hedge fund managers. T. Troy Dixon, Founder and Chief Investment Officer, Hollis Park Partners LP, shares the steps his firm is taking to expose diverse young people to the industry to contribute to greater diversity within the industry.

A Long-Term Perspective

As a portfolio manager and entrepreneur, Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital Management, says one of the most exciting things is the ever-changing industry. She believes her firm will be more successful by focusing on long-term ideas and a long-term discipline – separating the true signals from the noise.

Avoiding Groupthink

Emerging managers and diverse owned management firms bring a different way of thinking about how to acquire portfolio companies, what price they are looking to pay for them and how to position leadership on those portfolio companies. Christopher Robinson, Partner, Investment Funds Group of Kirkland & Ellis LLP, says these new perspectives help avoid group thinking and offers another way to approach the marketplace – something LPs appreciate.

Building a Bellwether

The hedge fund industry is changing dramatically on a daily basis, says T. Troy Dixon, Founder and Chief Investment Officer, Hollis Park Partners LP. In the current environment, solution-based investing is as important as alpha generation. He envisions his firm as becoming one of the bellwether alternative asset managers within the structured products space globally.

Comfortable with Being Uncomfortable

“In order to find unique investment opportunities, investors have to get comfortable with being uncomfortable,” says Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital Management. She points out that the easy decisions have already been discounted in the markets, so the challenge is finding ideas that others haven’t found – in trades that would be uncomfortable to many investors. She cites companies with strong fundamentals but whose stock has dropped dramatically as an example.

Expanding the Scope

How can service providers help diverse owned firms expand their scope? Christopher Robinson, Partner, Investment Funds Group of Kirkland & Ellis LLP, explains how service providers can assist with establishing a credit fund, a permanent capital vehicle, or exploring a GP minority transaction.

Massive Changes Ahead

T. Troy Dixon, Founder and Chief Investment Officer, Hollis Park Partners LP, He also sees a “massive change” ahead for housing, Freddie Mac and Fannie Made and other areas where risk premium should rise, creating opportunities over the coming months. He also recounts his transition from running a large trading operation at a major investment bank to running a hedge fund.

Forecasting Returns

When it comes to investment strategies, Matarin Capital Management employs a return forecasting model. Nili Gilbert, Co-Founder and Portfolio Manager of the firm says her team looks at four concepts for forecasting stock prices: good businesses, inexpensive valuations, shareholder-friendly leadership teams, and evidence of short-term catalysts for outperformance. While the market may reward one theme or another from time to time, she says there is ideally something in place to benefit from the prevailing themes.

Providing a Value Add

Christopher Robinson, Partner, Investment Funds Group of Kirkland & Ellis LLP, explains how service providers – law firms, fund auditors, fund administrators or placement agents – can provide significant value add and position emerging managers to succeed.

An Unexpected Journey

T. Troy Dixon, Founder and Chief Investment Officer, Hollis Park Partners LP, recounts his journey from a child in Hollis, Queens, to collegiate athlete, to running a significant revenue stream for a major institution, and finally launching an alternative asset management firm specializing in structured products.

Behavioral Alpha

Markets are inefficient in the intermediate term due to emotional reactions from many investors, according to Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital Management. When these factors come into play, asset prices may move further away from their true fair value. Matarin seeks to capitalize on those emotional swings using disciplined approach to remove the emotional factor to generate what Gilbert refers to as “behavioral alpha.”

Risk Management

Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital Management, shares her insight into why she and her partners took the risk with leaving large firms to launch their own, explains the benefits of Matarin’s boutique structure and her thoughts behind building a firm with purpose that reflect the values of its founders relative to fee structure, transparency, communications and more.

Raising Diversity to a Higher Level

In order to see more women in finance, Nili Gilbert, Co-Founder and Portfolio Manager of Matarin Capital Management, says there needs to be a concerted focus on both the top and bottom ends of the pipeline. This means a focus on education and mentoring for attract younger people while also ensuring there are opportunities for advancement for those women and people of color entering the industry.

Outsized Returns are not Enough

Christopher Robinson, Partner, Investment Funds Group of Kirkland & Ellis LLP, says that while diverse owned private equity firms have been outperforming, it will take more than outsized returns for more of these firms to grow to scale. He explains how sponsors, new product lines and market conditions can impact the growth and scope of diverse owned firms.