Alternative investment strategies, including hedge funds, continue to grow because they are open to new ideas and new talent.
Back in 1999, when I joined Marshall Wace while still at Oxford University, we began to assess systematically the investment ideas coming into the firm. From that initial concept, we developed the TOPS system, which has grown into a sophisticated, multi-billion dollar strategy, implemented by dozens of people, which not only analyses those ideas but sources additional data and applies our proprietary technology to come up with trading signals.
These days, it is frequently the quantitative researchers and data scientists who generate some of the industry’s best returns, something that would have seemed fanciful 10 or 15 years ago when old-fashioned City stock-pickers dominated markets.
But you don’t have to be a quant or work at one of the big financial institutions to generate alpha. There are still plenty of stock-picking strategies and the analytical skills required still form the basis of the industry’s returns.
The New York Sohn Investment Conference, a hedge fund charity event set up in 1995 to raise money for paediatric cancer causes, launched the Sohn Investment Idea Contest several years ago, to encourage wider access to the industry and broader participation in its charitable mission.
The objective of the exercise is simple enough. Entrants pick what they believe to be a compelling investment idea and a panel of expert judges selects the one they believe is the best.
While London Sohn Investment Conference has been running for several years, enabling some of the alternatives industry’s best-known names to present their most interesting investment calls, the Idea Contest has not been run on this side of the Atlantic – until now.
The first Sohn London Investment Idea Contest opens for entrants on the 30 October, with the winner announced a month later at the main event on the 30 November at the London Marriott Hotel, Grosvenor Square. He or she will get to present their idea from the main stage and will receive two tickets for the main conference.
The contest is open to anyone and is a powerful reminder that in order to thrive, the alternatives industry has to be open to new ideas and to constantly renew itself. For investment enthusiasts, students and others attempting to break into the industry, it is a chance to get a compelling investment idea in front of the brightest minds in hedge funds, get noticed and potentially forge a path into an alternative investment career.
In New York in 2011, the Idea Contest winner was an undergraduate student from the University of Indiana, Sunjay Gorawara, whose winning tip, Bridgepoint Education, was applauded by a judging panel comprising senior industry figures such as David Einhorn and Bill Ackman.
This year’s New York winner, Dylan Adelman, a student at Wharton Business School, appeared on American television to debate his tip with Jim Cramer, the celebrated pundit.
I was fortunate enough to have joined Marshall Wace directly from university so the chance to hear from the industry’s potential future stars is just one reason I am delighted to be among the judges for the inaugural Sohn London Investment Idea Contest. It will be fascinating to see the candidates taking part and the investment ideas that they come up with.
The key challenge entrants face is identifying their best idea. Under the contest rules, competitors can pitch any marketable security with a market value greater than $1bn, and opt to go long or suggest it as a short.
The potential universe open to alternative strategies is growing. The recent opening up of China to hedge funds, for example, throws up thousands of opportunities. Many of these securities are only known locally and yet these are growing markets with increasing amounts of liquidity for international investors. This is a major opportunity given how relatively few people analyse these markets, compared to those in Japan, Europe and America.
I will be particularly interested to see if the London competition attracts entries that are generated outside of these more developed markets.
It would also be gratifying to think that whoever ends up winning the Idea Contest might one day be a speaker at Sohn London in the years to come, having secured a role in the industry, to present another ground-breaking investment idea from the main stage to the delegates
Sohn’s main mission will always be to raise funds for research into paediatric cancer; it has delivered more than $80m to date since the first conference took place in New York. It is an honour to participate in this cause and to help spread awareness about how the hedge fund sector is supporting some of the most vulnerable children in our community. If the contest can also help discover the future stars of the industry, that would be another excellent achievement.
Anthony Clake is a partner at Marshall Wace and oversees the TOPS strategy