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Money matters: Focus on Forsyth Partners
Part 1
Graham Macdonald
MBMG International Ltd.
This week we focus on one of our preferred satellite fund
managers, UK-based Forsyth Partners, via a recent interview with their managing
director, Rossen Djounov.
How did Forsyth get into the fund of hedge funds business?
Djounov: Forsyth was established in 1991 by Paul Forsyth and
began by publishing independent research and ratings of investment funds. About
four or five years ago we started to receive increasing requests for hedge fund
research, and we made a strategic decision to use our research talents to create
fund-of-hedge-fund portfolios which we manage. Unlike our research on long-only
funds which are available for sale to clients, our hedge fund research is kept
proprietary. Today we manage approximately $500 million in hedge fund assets.
Forsyth invests in over 100 hedge fund managers. Why so many?
We believe that the biggest risk involved in investing in
hedge funds does not come from the investment side, but from the operational
side of the business. Monitoring and managing the fund’s operations is where
most hedge funds fail. While investment-specific risk can be diversified in
eight to 15 funds, the operational risk from each fund is still significant if
you have a concentrated number of them. Seven to eight years ago, people used to
think that investing in the largest hedge funds would limit the risks. But since
then failures at Long-Term Capital Management, Beacon Hill Asset Management and
Manhattan Investment Fund have proved that this isn’t necessarily the case.
The best way to protect against operational risk is to diversify among several
funds. Although we invest in over 100 hedge funds, about 60% of our assets are
in 30% of the funds. We maintain smaller investments in the other funds which
allows us to diversify and invest in early stage managers and get insights into
which funds will be the new stars as they emerge.
How do you allocate exposure to different managers? Do you
engage in tactical asset allocation?
We don’t believe that anyone has a consistent ability to forecast the
future, so we don’t engage in tactical asset allocation. Instead we look at
what we believe are the three factors that influence a manager’s ability to
generate alpha. Firstly there is market momentum, which is driven by the spread
between short and long-term interest rates. This factor is important for
long/short equity managers and fixed income funds that have a directional
component. Secondly, market volatility has a strong influence on the ability of
relative value strategies to generate alpha. The third factor driving hedge fund
returns is the market perception of risk. Strategies that are event driven or
rely on a catalyst for a re-pricing of a security are driven by a market’s
perception of risk. Oil prices are a very important factor influencing this.
When prices are high or expected to rise, the market perceives higher risks.
Currency volatility and interest rate changes are other signals. When we
allocate to hedge funds we don’t classify them by strategies, such as
long/short, macro, etcetera. Rather we look at which of these three factors
drives their returns, i.e., momentum, volatility or risk. We call this our
three-pillared approach and allocate one third of our hedge fund assets to each
pillar. When all three factors work together, opportunities for alpha are the
greatest. However, there can be circumstances when all three collapse, such as
earlier this year. In this environment hedge funds will find it very challenging
to make money.
The above data and research was compiled from sources believed to be
reliable. However, neither MBMG International Ltd nor its officers can
accept any liability for any errors or omissions in the above article nor
bear any responsibility for any losses achieved as a result of any actions
taken or not taken as a consequence of reading the above article. For more
information please contact Graham Macdonald on [email protected]
Snap Shots: Buying a digital point and shoot
by Harry Flashman
Having read my own advice of a few weeks ago, I decided
that it was time for the family to go digital, even if I would still be
faithful to film. The camera that the new digital would replace was a very
ancient compact point and shooter that was now giving variable results,
and it really was time to consign it to the bin.
 Buying
any type of camera in this country is an exercise worse than buying a new
set of spectacles. Anyone who has been dragged into an optometrist’s by
a bevy of immaculately dressed young ladies, and then pounced upon by a
white coated technician who wants to give you a computerized eye test,
while the aforementioned bevy is weighing up your wallet, will know what I
mean.
We ventured into one of the large shopping centres and
began the window shop overview, to be attacked by a bevy of young
hopefuls, obviously on their day off from the eye glasses department. In
no time at all, we were shepherded inside the shop and the sales pitch
began in earnest. Features were thrown at us like confetti at a western
wedding. The mountain of carefully unwrapped cameras also began to grow
like Mt. Everest. Despite my wife now in a state of total confusion she
saved the day by telling the eager sales people that we were going to walk
around and discuss it.
Unfortunately, the next camera shop was right next
door, and having seen that their neighbour had failed, pounced with an
even greater intensity. Once again we were shown a myriad of cameras, all
of which seemed to do the same job when we thought about it! We were
starting to become informed customers, a dangerous breed of animal!
One feature that my wife liked in these point and shoot
digital cameras was the ability to take short video clips. Now being
smarter than we were before we asked if these video clips could be played
back on the family TV set. When we were told yes, we then asked to see
this demonstrated. If you also think this would be a great feature, then
think again. In the more budget end of the digital point and shooters, the
video end result is poor to mediocre (at best). The images look like the
pixilated photographs on the front page of Thai newspapers, thinly
disguising dead bodies at traffic accident scenes. The more we
investigated, the more it became obvious that digital point and shoot
cameras are really only still image instruments. You are not going to get
‘movie’ and still capabilities at this level. Like the microwave oven
that has a clock, you will never be able to use it as a wrist watch! It is
an oven that can tell the time, not a clock that cooks food!
And so we went on to another shopping centre, to more
eager sales personnel, but by this stage we knew what we wanted. We needed
a camera with good optical qualities and a good sized memory card. An
optical zoom makes sense at this level - much more important than digital
zoom, but a most important feature is the viewing screen, known as an LCD
monitor in digital terminology. Get the biggest you can. There is an
enormous difference between looking at a two inch screen, compared to a
one and a half inch screen, believe me.
Another factor that we considered important was
physical size. Size does matter! But this time we were looking for small
dimensions. Since digital technology allows miniaturization, this means a
woman can pop the camera easily in her handbag, or a man into his shirt
pocket. Why continue with the relatively large film cameras when all you
want is point and shoot capabilities?
So that was how we made our choice of digital point and
shoot compact. Small overall size, large viewing screen (oops, LCD
monitor), easily operated controls and from a known quality manufacturer.
What did we end up with? Our choice was the Canon Digital Ixus 40. So
far we have not been disappointed.
Modern Medicine: Self-monitoring or personal neglect?
by Dr. Iain Corness, Consultant
After many years in the primary health care
business, I realized that many patients self-select into two very different
groups. There are those who worry with every symptom they ever get, and those
who ignore their body’s telling them of things that are amiss.
It is between these two sides that the field of
self-monitoring lies. With some patients, they will just not do these simple
procedures, but for others, they will slavishly carry out examination and
recording far more than their disease process would require.
It is important here to state that I am discussing long term
monitoring of chronic ailments, such as hypertension, diabetes or asthma. I am
not asking patients to become doctors and make their own diagnoses. Sometimes it
is hard enough for experienced doctors to do that!
This whole business of self monitoring is something that gets
much space in the medical literature, and the medical profession itself is also
quite divided over this issue. Here I will try to provide the ‘middle
ground’, which itself is not without certain problems.
Let’s take blood pressure problems first. In actual fact it
is quite difficult to get accurate blood pressure readings. Blood pressure is a
dynamic factor in the body. Step off the kerb and be narrowly missed by a
speeding motorcycle going the wrong way up a one way street and your blood
pressure will rise immediately. If it doesn’t, it probably means that he hit
you and you are already dead. There is also a well documented type of high blood
pressure reading called ‘White Coat Hypertension’, which is where the BP
goes up as the white coated doctor gets closer.
So what is your ‘real’ blood pressure reading? For me,
one isolated raised reading does not mean you have hypertension. All that the
one reading means is at that particular time, for any number of reasons, your BP
was elevated. It could be down again tomorrow. Only by taking serial readings
will you (and your doctor) know.
Let us now imagine that a definitive diagnosis of
hypertension has been made. This is where self monitoring can be very good. You
can return to your doctor and give him serial readings, taken at home, and these
will probably be closer to the ‘real’ numbers than ones taken in the sterile
and sometimes frightening doctor’s office. Mind you, this does depend upon
accurate home measurement, using accurate equipment.
However, the physicians with the care of diabetic patients
are not so enamoured of glucose self monitoring as the cardiologists are with BP
readings. There is little evidence that home blood glucose monitoring improves
outcomes in Type 2 diabetic patients. There may even be negative effects
associated with it, including increased distress and worry. Regular haemoglobin
A1c levels may be more appropriate than daily finger pricks. Since the Hb A1c
levels show the overall diabetic control over the previous three months, it is
actually a more consistent monitor, but that test is not available as an easy
home testing kit. It’s back to lining up to see your diabetic specialist on a
regular basis, I’m afraid.
And so to asthma. The respiratory physicians seem to be more
in agreement with home monitoring for this chronic condition. Serial lung
function testing with simple hand-held devices can show the asthma sufferer the
trends of decreasing or increasing respiratory function. At predetermined
levels, the patient can be instructed to initiate different therapies to stop
them going into a full-blown asthma attack. This is self monitoring towards a
preventive end. The main aim in asthma treatment.
Learn to Live to Learn: IGCSEs and A levels revisited
with Andrew Watson
One of many responses from readers over recent
weeks (and I truly welcome them all) has been from Mr Robert Patnicroft, a
retired teacher and former GCSE examiner who read my article, “How standards
can be maintained” with considerable interest. Consistent with my avowed
purpose of promoting informed debate, I am delighted to publish his response.
Many thanks, Robert.
“As you quite rightly state, statistics are dangerous
things and when discussing terms such as validity and reliability one has to
specify what kind of validity and reliability are meant.
“For many years I was an examiner for the oral section of
the Spanish GCSE examination. It was a prerequisite that all examiners attended
a standardisation meeting at which samples of work were marked, alternative
answers discussed and any anomalies in the marks scheme ironed out. Before
marking was commenced in earnest, a standardisation tape had to be marked and
the results submitted to an assistant chief examiner who then advised on one’s
accuracy. A further sample of marked tapes had to be submitted at a later date
and at the end of the marking process each examiner was graded on an A-E scale.
Those who did not meet the required standard either had to attend further
training or were not re-employed. I believe that it is safe to assume that if an
examiner was found to be unduly lenient or severe her/his marks were adjusted
accordingly.
“The perception that top grades have become easier to
acquire needs further examination. In the majority of secondary schools the head
of each department is free to select the Examination Board that is considered to
be most in line with the needs of the students and the ethos of the school.
There is no doubt that as teachers become more familiar with the particular
syllabus and past papers are examined in detail, they become more adept in
‘teaching to the syllabus’ and ‘question spotting’. This may, rightly or
wrongly, lead to their students gaining higher marks in their examinations and
arguably, higher grades. I say arguably, since to the best of my knowledge,
Examination Boards employ percentage cut-off points when awarding grades. The
justification for this is that without extensive and costly pre-testing of all
the items in a particular examination it is impossible to ensure that subsequent
examinations are of an equal degree of difficulty. Theoretically this could be
done in examinations where multiple choice questions are set and in Mathematics
and Physics, but would prove extremely difficult in examinations that demand an
essay-type response. It is easy to see that an ‘easy’ examination will give
a positive skew to the distribution curve of marks awarded, while a ‘hard’
examination will result in a negative skew. Thus, if an examination proves to be
particularly difficult, the mark necessary to obtain an ‘A’ grade will be
reduced significantly.
“Economic and political factors have to be considered also.
The several Examination Boards are in competition and if they are to remain in
business their examinations have to attract a sufficient number of candidates to
cover their considerable costs. Boards whose examinations are perceived by
teachers to be harder than the others will soon be forced out of business. In
areas where students at the age of 16 have a choice of institution at which to
complete their secondary studies, selection will often be made on the basis of
the league tables of examination results that are published annually.
“Politically, teachers have been put under pressure to
obtain ever better results and those accursed statistics would suggest that they
have succeeded, at least in part, with a greater percentage of their students
obtaining the top grades. The Examination Boards have experienced similar
pressure and I have no doubt that percentage passes have on occasion been
‘massaged’ when a cut-off at a particular mark would have resulted in an
apparent decrease in the number of candidates achieving an ‘A’ grade.
“I feel that your assertion that ‘universities are beset
by the problem of having to distinguish between students with a plethora of
‘A’ grades’ needs some clarification. As you will be will aware, for some
years now university entrance, with the partial exception of Oxford and
Cambridge, has been gained via UCAS, the university application clearing house
in Cheltenham. Provided the student gains the grades required by the University
of her/his first choice, she/he is assured of a place. True, to read Medicine at
one of the prestigious London Medical Schools or, say, Veterinary Science at
Bristol, a candidate may well need to obtain three or four ‘A’ grades. This
has been the case for as long as I can remember and is the exception rather than
the rule. Faculties of Engineering at less fashionable universities may find
passes at C, D, D, acceptable. Indeed, some universities have established a
one-year foundation course for those students whose results did not quite meet
the standard required to gain immediate admission – a product, to put it
vulgarly, of the “bums on seats” policy. Every September newspapers carry
pages of university advertisements listing thousands of vacant places in a wide
range of disciplines.”
Robert Patnicroft, BA (Hons), MA (EdRes)
Next week: Transaction and Transformation
 Heart to Heart with Hillary
The following note was in a
parcel containing an expensive bottle of French champagne and a box of Belgian
chocolates, left at the editorial offices:
Dear Hillary,
Enjoy! Promise kept!
Man looking for an honest car dealer
Dear Man looking for an honest car dealer,
You have restored not just mine, but everyone’s faith in human nature. For
those who cannot remember, a few weeks ago this gentleman wrote in, “Just to
let you know the Belgium chocs (liqueurs) and champagne will be with you shortly
as promised.” He certainly did keep his promise, and even delivered the parcel
personally. I shall also personally raise a glass to you, in thanks. I do hope
that you will find that honest car dealer! Have a great new year, Petal, you
deserve it! And to Mistersingha, the world’s greatest ingrate, I blow you a
raspberry, “Thrrrrrrrrrrrrpppppppppp!”
Dear Hillary,
I write to protest strongly that you saw fit to publish the letter from two old
codgers criticizing adorable young men like myself. I have to make a stand for
my lovely self, and if I had my way, all men over age 35 would be taken from the
streets of Pattaya to some island colony where tourists could throw stones at
them from passing boats, leaving the ladies to us more desirable creatures.
It is nature’s way that us sexy young studs give our charms (no charge) to
these eager young damsels who prostrate themselves at our David Beckham feet,
while the old wrinklies sit reminiscing in their allotment pigeon lofts. And No!
We will not age as they have. Cosmetic surgery will see to that. I intend to
keep my chiselled features, and the ladies will forever be calling out, “Hello
handsome man”.
I am not totally problem free though. I do have some lonely nights due to
staring for hours into the mirror while preparing to give some lucky girl the
pleasure of my delightful self, and then not being able to tear myself away from
such a gorgeous reflection.
No my dear Hillary. No chocolates and champagne for you for publishing such a
hurtful letter. Instead I will spend the money on yet another tattoo to adorn my
Adonis-like physique. Perhaps complete the snake that entwines my
muscle-rippling torso. The tattooist had no vision as to where it might
terminate, to complete and embellish such perfection, for the pleasure of my
countless admirers.
To redeem yourself, I demand that you come up with an idea as to where the
tattooist might conclude the serpent. You always come up with something.
Nairod Remraf
Dear Nairod,
It is indeed a pleasure to receive such an adulatory letter. It must be very
satisfying for you to be able to go to bed every night holding yourself and your
serpent so tightly. You are just so perfect! Why would you ever want to have
someone else to share your bed with you? The thought defies all logic.
However, by holding your letter up to the mirror, your true identity was
revealed. “Muscle-rippling torso” indeed! And that’s no “serpent”
tattoo either! Judging by the size, I would call it more of an “asp” than a
proper-sized snake, irrespective of whether it is covered by your shirt or your
trousers.
David Beckham indeed! I saw a movie called “Bend it like Beckham” and that
is probably the only connection between the famous footy player and yourself. A
severe attack of the ‘bends’. However, they tell me that Vitamin V fixes the
problem, and you don’t end up playing 90 minutes with a limp.
Now you want me to “redeem” myself? My dear “Nairod”, I didn’t know I
had even been pawned! I hope I got a good price for me.
But to show my good faith, I have thought long and hard about you and your snake
problem. Cleopatra was bitten on her right-sided 34B (by the snake, not Marc
Anthony), but that would not be appropriate for you. I think your snake should
entwine itself around your perfect body and disappear between your cheeky
protuberances. Like the biblical eye for an eye, this would be more like an asp
for an ass! Thank you for your amusing letter, though I did have to shorten it.
That part of you, if nothing else, was too long.
Dear Hillary,
Why do the Thai girls all wear those moulded plastic and rubber bras that look
like two dumplings attached to the front of their chests? It is obvious that the
lumps don’t belong to them, but come from their bra manufacturer. I’m like a
lot of guys and like a nice pair on a girl, but real ones, not rubber ones,
please.
Tim the T-man
Dear Tim the T-man,
I presume you mean Tim the Toyman, you naughty little Petal! I must admit that I
have never heard the girls in the lingerie shops asking if madam would like one
lump or two, as I have heard in some five star restaurants over coffee. Perhaps
something swinging is going on behind the kitchen swinging doors, that Hillary
is unaware of. Dearie me! Since Thai girls were standing behind the door when
the chests were given out (the Russian ladies made it to the front row), we have
to do something to catch the eye of Toymen like you, Tim. So you have discovered
our secret. Don’t tell everyone, that’s a good boy.
Psychological Perspectives: Caring for others at a price:
Disaster relief workers at risk
by Michael Catalanello,
Ph.D.
I was recently talking to two students
who happened to be vacationing on Koh Phi Phi on the fateful day that the
tsunamis hit the small island resort. Fortunately, they were on a portion
of the island that was not badly affected. Not having immediate access to
the media and unable to leave the island for several days following the
event, these students learned of the tragedy firsthand, as they encountered
local scenes of death, personal injury, and widespread destruction of
property. They saw people rushing about frantically, many tearfully
searching through ruins for missing loved ones. Now, about a month later,
these students admitted to experiencing difficulty readjusting to an
academic routine of attending classes, and concentrating on their studies.
It is not necessary to have been present on Phi Phi or
Phuket to be emotionally affected by this tragedy. A stoic British
colleague of mine was commenting that he had trouble understanding the
strong emotional reactions of those in his native England, to the loss of
life brought on by this disaster. Such extreme reactions, in his view, were
usually reserved for those suffering the loss of someone they know
personally, such as a close friend or family member.
Many, like myself, who learned of the event only through
the news media, were, nevertheless, deeply moved by what we saw. Television
news displayed graphic video footage of rising waters engulfing
vacationers, people desperately clinging to any stationary object, those
unable to resist the powerful waves, being swept away from their loved
ones. In the aftermath of the floods, haunting looks of disorientation and
utter disbelief on the faces of survivors is hard to forget, even for those
of us who watched and listened from a safe distance, in the comfort of our
living rooms.
The experience of strong emotions is considered normal,
particularly immediately after witnessing an event involving death, serious
injury, or the threat of death or severe injury. If certain characteristic
symptoms persist for more than a month following a person’s exposure to
trauma, he may be suffering from post-traumatic stress disorder (PTSD). One
hallmark of PTSD is the persistent re-experiencing of the traumatic event,
such as through recurring disturbing nightmares, thoughts, or
recollections.
In the aftermath of a natural disaster like the Asian
tsunamis, those most directly affected are at greatest risk for
experiencing severe and prolonged emotional distress as a result. Others
less directly impacted, however, may also experience such reactions. One
group of people at particular risk for experiencing unpleasant or
disturbing emotional reactions to a natural disaster is that of relief
workers.
Although a diverse group of people, relief workers share
certain characteristics that may increase their risk of experiencing
persistent disturbing emotions following a disaster. They are likely to be
very dedicated, caring and compassionate individuals, somewhat
perfectionistic, maintaining high personal and professional standards for
their lives and work. As such, they may be prone to pushing themselves
beyond their own personal limits in order to meet the virtually endless
needs of disaster victims.
Following a disaster many relief workers are called upon
to work long hours under difficult conditions. They come face to face with
those whose losses are greatest, children who have lost parents, parents
who have lost children, entire families wiped out. Confronted by a level of
need that is impossible to satisfy, these workers may begin feeling
ineffective and dissatisfied by their perceived inability to make a
significant difference.
The American Red Cross offers the following advice
to help relief workers cope with the aftermath of a natural disaster:
Understand and appreciate the intensity of your emotions
and talk to others about your feelings.
Understand how stress may be affecting you, and make
every effort to deal with it;
Engage in stress-relieving activities, like walking,
talking to others, or using deep-breathing exercises;
Eat nutritional foods, avoid consuming excessive amounts
of caffeine or alcohol, get plenty of rest and as much sleep as possible;
Feel free to make a request of your supervisor to allow
you time off or a change in assignment, if you need it, to rest or
recharge.
This, no doubt, seems pretty good advice for all of us, whether we
happen to be disaster victims, relief workers, or simply normal people,
with a healthy sensitivity to the suffering of others.
Dr. Catalanello is a licensed psychologist in his home
State of Louisiana, USA. He is a member of the Faculty of Liberal Arts at
Asian University, Chonburi. Address questions and comments to him at [email protected]
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