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by: Roosevelt Romaguera


Marketplace > University of Florida > Finance > FIN 6930 > CORP FIN MODELING 1
Roosevelt Romaguera
GPA 3.77


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Class Notes
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This 16 page Class Notes was uploaded by Roosevelt Romaguera on Friday September 18, 2015. The Class Notes belongs to FIN 6930 at University of Florida taught by Staff in Fall. Since its upload, it has received 28 views. For similar materials see /class/206606/fin-6930-university-of-florida in Finance at University of Florida.




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Date Created: 09/18/15
A INTEGRITAS ADVISORS Selecting an Investment Manager The Investment Manager Research Process A INTEGRITAS A D V S O R S Finding the Right Manager How do I select quality money mangers 0 Who are the right managers to help me pursue my nancial goals Was a manager s past performance largely a result of skill or luck A INTEGRITAS ADVISORS Manager Research Philosophy Our manager research philosophy is based on the belief that experience objectivity independent thinking creativity patience and discipline are the most critical factors leading to successful investment management Creativity The foresight to find the solution before anyone else sees it The creative manager is constantly looking forward and challenging the status quo Patience The manager s ability to wait for genuine opportunities and to resist the pressure to act when they do not exist Discipline The manager s strict adherence to a stated investment philosophy and process regardless of market conditions A INTEGRITAS A D V S O R S Manager Research Process 1 Identify Candidate V Dili ence Information F Investment Committee Approval Understand Investment Philoso h amp Process Verify amp Build Conviction A INTEGRITAS ADVISORS Manager Research Process Identify Candidate Collect amp Analyze Information Based on the search requirements the process begins with a preliminary selection of those managers who specialize in the asset class or investment style being sought Initial screens are run using various risk adjusted statistical measures A manager candidate must pass the first screen which includes analysis of a detailed questionnaire that covers all aspects of the manager s investment philosophy process and research capabilities Other factors include their key personnel management and corporate structure and detailed statistical analysis over the short and long term A INTEGRITAS ADVISORS Manager Research Process Understand Process Key members of each manager candidate s portfolio team are invited to hi1amp h meet with lntegritas Manager Research Analyst The meeting allows P 030p y Integritas to gain a thorough understanding of the manager s philosophy and process Verify amp Build If the Integritas team is satisfied with its review it will perform additional analysis by looking at historical holdings to further understand the manager s investment philosophy Calls to references along with attorneys and auditors of the manager are also performed A INTEGRITAS A D V S O R S Manager Research Process ReView 1360151011 A final analysis and recommendation is prepared by the Manager For Research Team They review all research analysis opinions and Recommendatlon recommendations to help insure research consistency throughout the process 011g oi Hg Due The Integritas Team will hold monthly conference calls with the Diligence managers to ensure that the manager is sticking to the stated investment philosophy and is generating unique and sound investment ideas that will lead to continued outperformance of their respective benchmark A INTEGRITAS A D v s o R 5 Evaluating Performance 0 How does their performance compare to their benchmark 0 How do they compare to their peer group 0 Have they stayed Within their mandate and remained consistent to their investment philosophy 0 Have they achieved their objectives If bottomup stock picker have they outperformed their sector If a topdown manager have their sector and timing decisions added value 0 How consistent has their performance been Has their performance been steady or run hot and cold 0 How much risk have they taken to achieve their results 0 How have they performed in the worst marketsbest markets A INTEGRITAS A D v s o R 5 Evaluating Performance Measuring an investment manager s performance goes far beyond statistical studies Statistics show only an accurate picture of what happened To uncover why and how takes experienced judgment A INTEGRITAS A D V S O R S Manager Due Diligence Quantitative Analysis 0 The number crunching 0 Evaluate performance on a riskadjusted basis considering factors such as downside and upside capture ratio semivariance beta r2 and alpha Qualitative Analysis 0 The softer side people process structure 0 Look at issues including manager background account administration audited statements and AIMR compliance 10 A INTEGRITAS A D v I s o R 5 Due Diligence Quantitative Questions 39 Return 0 How do the returns compare vs peers 0 Are returns due to style drift or superior stock selection Volatilitv Was an annual return generated by large gains in one or two months Or was the annual return spread evenly across the period 0 How bad were the worst months 0 Examine the peak to valley decline How long does it take a manager to recover the loss oBreadth Did the manager make a profit on all investments Or did he or she hit a homerun on one trade that accounted for the majority of the gains of the fund in a particular period 11 A INTEGRITAS A D v I s o R 5 Due Diligence Quantitative Questions cont d Repetition 01s the fund s investment process easily repeatable Strategy 0 How does the fund differentiate itself from others in its category 0 How are investment decisions made Black BOX Fundamentals Model 0 What was the weakest investment made and how was it eXited 0 What was the strongest investment made and how was it eXited 0 What is your plan for the upcoming year oRisk 0 When you have a sleepless night what about your holdings keeps you awake 0 Do you have a designated risk manager What is their training What else do they do 0 How do you measure and assess risk 0 Do you include risk limits in your guidelines 0 How long would it take to liquidate your portfolio 12 A INTEGRITAS A D V I S O R 5 Due Diligence Qualitative Questions Fund Formation amp Structure 0 Who are the founders and are they still with the firm 0 Are the principals actively engaged in the success of the business 0 Examine potential con icts of interest including soft dollar arrangements marketing relationships and brokerage relationships 0 How are principalsemployees compensated Subscriptions amp Redemptions How are new funds received 0 How are redemptions processed Manager Profile 0 Verify the facts of the resume 0 Obtain and validate references 0 How is the manager s personal life Stable Volatile 0 How passionate is the manager about achieving outstanding results above and beyond hisher personal success 13 A INTEGRITAS A D v I s o R 5 Due Diligence Qualitative Questions cont d Fund Reporting 0 Who if anyone is tracking the trades How often is reconciliation of cash conducted Fund Administration 0 How do you insure the separation of front and back office functions 0 Do they monitor that the terms of the offering are being upheld 0 If an outside administrator perform a background check Auditor 0 How experienced are they with auditing hedge funds or SMA s 0 Have there been any problems with previous audits 0 How do they track assets during an audit Attorneys 0 How experienced are they with hedge fund or SMA s 0 Have there been any problems with the manager 14 A INTEGRITAS A D V S O R S Due Diligence Qualitative Questions cont d Other Investors How many investors are there What is the percentage owned by the five largest investors 0 What is the investment by principals Investor types 0 Individual vs Institutional Avg net worth 0 Who were the original investors 15 A INTEGRITAS A D v I s o R 5 Manager Rating System Highly Recommended The highest possible rating Overall the manager is well above the standards set by our process Recommended A good rating Overall the manager has met the standards set by our process Hold The strategy is currently not available for new investment There is a degree of concern in one of more areas and improvement is needed Not Recommended The strategy is no longer available for new or additional investment Signi cant concerns exist in one or more areas 16


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