Your humble scribe is currently in an un-named US city this week attending a major un-named hedge fund event for institutional investors.  The event is closed to the (mainstream) media.  So to prevent any griping about a blogger getting an inside perspective on the proceedings, the event will remain un-named – as will the identities of the hedge funds and pension plans in attendance.  Suffice it to say, this is an impressive assembly of hedge fund industry leaders from around the world.

With these caveats out of the way, I will say that could not have possibly organized an event that focused any more on alpha-centric investing.  Several plenary sessions dealt directly with the question of “hedge fund beta” and “hedge fund alpha” (which, I suppose, are the same thing), and these issues weren’t far below the surface in most of the other sessions.

One of the highlights of day one was surely the statement of a prominent academic and Nobel Laureate (a good Canadian boy who co-invented a popular options pricing model…with a guy whose last name is a very dark colour…) who said that “portfolio management theory works – as long as you don’t need it”.  He later qualified the remark to mean that modern portfolio theory is based on a static model that gives “an incomplete picture of reality” and that volatilities invariably blow out in times of distress.

Stay tuned, we will be touching on the various themes covered at this event over the next few weeks on – even though we can’t say where we are, who we’re talking to, and what they’re saying.

-Alpha Male

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