Wharton Investment Management Conference 2007 explores new frontiers in global investing

By: Joe Hawkins (WG'09) Contributing Writer

Posted: 11/5/07

The Investment Management Club's 10th Annual Wharton Investment Management Conference was another smashing success. The Conference, held Friday, October 26th at The Union League of Philadelphia, drew nearly 30 industry professionals and over 200 students to discuss "New Frontiers in Global Investing" and the rapidly evolving landscape of the markets. The conference featured John Gunn, Chairman and CEO of Dodge & Cox, as the lunch keynote speaker as well as seven panels on topics ranging from Emerging Markets to Hedge Funds.

In addition, this year marked the first time the Conference has hosted a panel on Fixed Income Investing, a highly relevant topic given the recent turmoil in the credit markets and potential spillover into the rest of the economy.

The keynote lunch speaker, John Gunn, hit home the concept that time and patience are your greatest attributes as an investor. He noted that Dodge & Cox takes a view that "investing is a loser's game." He used the analogy of playing tennis with an amateur. The one who wins the game is the one who makes the least mistakes. Therefore, Dodge & Cox focuses primarily on not losing money for investors and performance typically follows.

The morning panel focusing on the Business of Investing was interesting, and highlighted a bright future for the industry. Avi Nachmany, Director of Research and EVP at Strategic Insight Mutual Fund Research & Consulting, noted the enormous growth of assets under management continues to create a demand for money management skills. Specifically, Nachmany noted that in 1986, there were a couple hundred billion dollars in assets under management in the United States. Today, there is more than $13 trillion in assets under management in the United States and $14 trillion outside the United States.

Paige Scott, Partner at Sextant Search Partners, noted a trend shifting towards specialized investment professionals and creating research capabilities towards sector specialization. In addition, it is becoming more acceptable for people to become career research analysts with sector specialization rather than portfolio managers with large assets under management, given the increased demand for specialized investing skills. Each of the panelists also noted a convergence of the asset management model across private equity, mutual funds, and hedge funds. "I doubt 10 years from now we will even be talking about hedge funds versus mutual funds, "said David Antonelli (WG'91), EVP at MFS Investment Management.

Student reactions were overwhelmingly positive to this year's event. Manpreet Singh (WG'09) remarked, "I have had the benefit of attending several investment management conferences in my life prior to enrolling in Wharton. And I can categorically say that the Wharton Investment Management Conference ranked as one of the best in terms of the quality of panels, the opportunity to network with other investment management professionals and the knowledge gleaned from the timely topics. Some conferences I have attended in the past are great to network at, but empty on substance, while others provide valuable knowledge with poor forums for meeting new faces. I rarely have attended a conference combining these key attributes that I believe make a conference worthwhile."

Other students remarked that particular panels were helpful in learning more about the industry. One student found the Emerging Markets panel to be highly informative. The opportunity to listen to industry expert Harvey Sawikin from Firebird Management illuminate the audience on his thoughts regarding the differences between emerging and international markets was quite compelling. Sawikin stated that if you hear a foreign country and laugh when you hear an investment idea, you know that's an Emerging Market (i.e., Angola and North Korea, not Taiwan or South Africa).

Dack LaMarque (WG'09) found the Value Investing and Growth Investing panels to be most helpful. The Value Investing panel featured a variety of industry greats, such as Whitney Tilson, Managing Partner of Tilson Funds, and Lisa Rapuano, Founder and Portfolio Manager of Lane Five Capital and former colleague of Bill Miller at Legg Mason Capital Management. Dack noted he particularly valued Rapuano's insight that "100% of the value of a company is in the future, and 100% of the information is in the past" as well as her remarks that "the world is not linear" and it is important for us to stop looking at it that way.

A main theme emanating from the Growth Investing Panel seemed to be the misconception of value versus growth, mirroring Warren Buffet's claim that growth is simply a component of value, and any distinction between entirely misses the point. It appeared that the name of the game for the panelists in both the Value and Growth Investing panels is simply doing great bottoms-up research to determine the intrinsic value of a company and purchasing shares when the price was significantly below their estimate.

Another well-attended panel was the Hedge Fund Panel. A major theme from the panel was the increasing institutionalization of hedge funds from an era where funds were run more like Mom & Pop shops. Institutional clients are demanding more professional organizations and more sophisticated risk management, which has caused the noted transformation in the industry.

Michael Freedman, Portfolio Manager at Omega Advisors, said successful hedge fund candidates are 1) passionate about the business, 2) good at math, accounting, and history, and 3) good at communication skills. He also recommended getting involved with the Wharton Investment Fund (get your stock pitches ready, all you budding hedge fund analysts!) and to not get discouraged if you don't crack into the business directly out of school because there are many different paths into the hedge fund business. Harold Schroeder of Carlson Capital said candidates should consider firm risk, client money base, and your own personal risk profile when evaluating hedge fund opportunities.

Overall, the Conference was another success for Wharton and its students. The Investment Management Club would like to thank all the students and professionals who attended the Conference.