Magazine article New Internationalist

Confessions of a Hedge Fund Analyst: Sheelah Moore Bails out of a World Where Luck Is More Important Than Brains

Magazine article New Internationalist

Confessions of a Hedge Fund Analyst: Sheelah Moore Bails out of a World Where Luck Is More Important Than Brains

Article excerpt

SHEELAH MOORE bails out of a world where luck is more important than brains.

A YEAR-AND-A-HALF ago there was an opportunity to make money on the shares of a troubled energy company. Enron was being taken over by Dynegy and the bonds were trading cheap. I thought it sounded crazy - Enron was clearly bankrupt - but the hedge fund's two other analysts, healthy MBAs from the Midwest, liked to gamble. Returns were hard to come by in a saturated Mergers and Acquisitions market, so our boss, the portfolio manager, went for it too. The next day, the fund lost $800,000 when the bonds were sold in a panic.

`You can't score if you don't shoot,' and `You've got to be in it to win it,' were repeated daily by three analysts, two traders from New Jersey, and our portfolio manager, the doppelganger of Ariel Sharon. With thousands of funds chasing meagre returns, bets kept getting riskier. For 11 hours a day we searched for a windfall, staring at stacks of computer screens without blinking.

It wasn't the life I had planned. I graduated film school with enough debt to consider a field about which I knew nothing. While temping at a hedge fund, an unregulated investment pool with lofty fees and million-dollar investment minimums, I accepted a full-time position. Three years later I became a vice-president at a larger one with $400 million in assets. We were Risk Arbitrageurs, investing in mergers and take-overs. We tried to work ourselves into a position to earn the `spread' in share value between the start and the completion of the deal. And deal closing was everything.

All news was bad news and would provoke a variety of over-reactions. Rumour of a Securities and Exchange Commission investigation or antitrust (ie a government-ordered break-up of a monopoly) ruling would be yelled across the room. The analyst whose position was in flames would scramble to consult the boss before instructing the traders to buy or sell. …

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