Episode 24: Where are the Opportunities in Long Short Equity & What Makes a Good Manager?

Episode 24: Where are the Opportunities in Long Short Equity & What Makes a Good Manager?

This episode was filmed at Gaining the Edge - Cap Intro Florida 2022 to benefit at-risk youth in West Palm Beach in mid-January.??

The event began with five “off the record” panels focusing on different parts of the alternative investment industry.?Unlike most alternative conferences featuring hedge fund and private equity managers who present with an unwavering commitment to their own strategy,?our panelists included only leading alternative investment allocators.?Throughout the program, they provided their unbiased insights on various ways to use alternative investments to enhance the risk adjusted returns of a diversified portfolio. The content of the panels are terrific and highly educational.?We will be sharing links to the panels over the next few weeks, with the third included below.

Speakers for Episode 24 (bios below):

• Aetos Alternatives Management, Juliette Menga, CFA – Director, Chair of the ESG Committee
• Clearbrook, Elisa Mailman – Managing Director
• K2 / Franklin Templeton, Justin McEntee – Managing Director
• PA Capital, Charles Honey – Managing Director

Moderator:?Agecroft Partners & Gaining the Edge, Doug Rothschild –?President

Please use the following link to watch the panel:?https://youtu.be/A24PguerVhg

Long short equity hedge funds represent approximately a third of hedge fund industry assets. During the last decade they had difficulty keeping up with the S&P 500 on an exposure weighted basis as volatility in the equity markets declined due to accommodative monetary policy and massive flows into index funds, which helped the largest stocks outperform due to expanding price earnings ratios. Are long short equity strategies finally well positioned to outperform?

There are many different types of long short equity managers based on strategy or type of stocks they focus on. Based on the following list, what type of long short equity managers currently look the most attractive and why?

• Size of company - large cap vs small/mid-cap companies?
• Geographical focus - Global vs US only and developed markets vs emerging markets??
• Industry focus - single sector (tech, consumer, healthcare) vs multi sector?
• Net exposure - long biased vs low net?
• Research process - fundamental vs qualitative??
• Portfolio construction - concentrated vs diversified?

Other questions discussed include:

• Does asset size of a fund or length of track record matter??
• How do you source managers? Do you use databases, cap intro events, networking with friends, industry publication?
• How important is a managers skill at shorting and what factors do you focus on in evaluating shorting capability?
• What are today’s catalysts for improved returns?
• What changes in fund terms are you seeing? How about hurdles for performance fees?

Speakers?bios:

Juliette Menga, CFA, Director, Chair of the ESG Committee, Aetos Alternatives Management

Ms. Menga is a Director on Aetos’ investment team and Chair of the ESG Committee. Prior to joining Aetos in 2020, Ms. Menga was a Director of Investments and Associate Portfolio Manager at Alternative Investment Group (AIG) from 2007, where she launched and co-managed two fund of hedge fund strategies focused on ESG and opportunistic investments. Prior to AIG, she worked at New York Life Investment Management as an Analyst in their Derivative Analytics Group and at Excalibur Advisors as a Research Analyst.

Ms. Menga received dual Bachelor of Science degrees in Computer Science and Mathematics at Kennesaw State University and a Master of Science in Financial Mathematics from Florida State University.

Ms. Menga is a CFA Charterholder, a member of PRI’s Hedge Fund Advisory Committee and served on the PRI Hedge Fund Working Group to develop guidelines for the application of ESG principles to hedge strategies. She serves on the Investment Committee of the Nellie Mae Educational Foundation as an Advisory Board member and is a board member of Wholesome Health Promotions, an organization that educates and promotes general wellness, good nutrition and health practices in rural and underprivileged communities in Cameroon.

Elisa Mailman, Managing Director, Clearbrook

Elisa is a member of Clearbrook’s Investment Research Committee and as Managing Director she assists clients with their portfolios. Her background in Alternatives allows her to bring her Socratic skills to work with clients on how positioning alternatives can work as a risk mitigator and a surrogate to other asset classes. Before Clearbrook, she was the co-founder and CIO of E Street Management, LLC. She worked closely with the CEO on position sizing and all business matters, including K1 and audit processes, fundraising, and general business management.

Elisa began her career as a Generalist Equity Analyst and Junior Portfolio Manager at Glickenhaus & Co. It led to a position as Vice President at the Financial Relations Board before she became the Vice President of Investor Relations at Launch Media, an internet music site acquired by Yahoo. She spent the next seven years as a Senior Analyst/Portfolio Manager at Tremont Capital Management, involved in global long and short equity, responsible for manager sourcing, analysis, due diligence, and managing funds.

After that, Elisa was the Director of Research at New Legacy Group, LLC handling the sourcing and monitoring investments in all asset classes. She helped develop New Legacy’s Emerging Manager Fund and implemented their operational due diligence process.

Elisa earned a BA in Speech Communications and with a minor in Business from the University of Maryland. She currently serves on the investment committee for the Teachers College of Columbia University’s endowment.

Justin McEntee, Managing Director, K2 / Franklin Templeton

Justin J. McEntee, Managing Director, joined K2 in June 2015. He began his investment career in 1999 Hambrecht & Quist in San Francisco as an equity research analyst covering communications equipment and then in 2000 moved to Goldman Sachs in London to cover pan-European semiconductors. In 2002, Mr. McEntee joined Sierra Global Management, a European-focused long/short hedge fund in New York where he was a partner and telecom, media, and technology (“TMT”) sector head. In 2007, he joined Merrill Lynch’s Principal Credit Group (“PCG”), where he was investing across the capital structure in global Telecom, Media, and Technology (“TMT”) companies. Following the closure of PCG in 2008, he joined Weiss Multi-Strategy Advisors, a multi-strategy hedge fund where he covered European TMT as a senior analyst. In 2010, Mr. McEntee moved to Tourmaline, Societe Generale’s London-based proprietary investing group to co-run a market-neutral global technology portfolio. In 2013, he joined Goodnow Investment group, a long/short hedge fund in Darien, Connecticut as a senior analyst. In 2014, he joined Scoria Capital Partners, a long/short hedge fund, as the global technology sector head. Mr. McEntee graduated cum laude from Cornell University with a B.S. in electrical engineering in 1996 and from Stanford University in 1999 with an M.S. in management science.

Charles Honey, Managing Director, PA Capital

Charles Honey is an Investment Committee member. Charles focuses on sourcing, underwriting, and monitoring of long/short equity investments, including funds and direct equity positions. Prior to joining Private Advisors, Charles was the Managing Partner of Rapidan Capital, a long/short equity hedge fund that he founded. Prior to Rapidan, Charles held Managing Director roles in the hedge fund groups at Morgens, Waterfall, Vintiadis & Company and at Trainer, Wortham & Company. He began his career as a trader and research analyst for Woodward & Associates, a New York based hedge fund. Charles has over two decades of equity investing experience.

Charles received a B.S. in Business Administration from Washington & Lee University.

Moderator

Doug Rothschild, President,?Agecroft Partners & Gaining the Edge

Douglas R. Rothschild is President of Agecroft Partners where he helps oversee the day to day operations of the firm. He has over 26 years of experience in the financial services industry including 6 on the executive committee of one of the largest global hedge funds. Doug was also President of a Chicago based asset management firm where he led the growth from $300M to a peak of over $1B in AUM. He has been a presenter at industry conferences as well as the premier business schools in the U.S. Doug earned a master’s degree from Arizona State University and a bachelor’s degree from Wheaton College. He also spent 2 years in the NFL with the Chicago Bears and the Cincinnati Bengals.