Odd Lots

How the Hottest Hedge Funds on Wall Street Really Manage Risk

68 snips
Jul 25, 2024
Rich Falk-Wallace, founder and CEO of Arcana, shares insights from his experience at top hedge funds like Citadel. He discusses how multi-strategy hedge funds efficiently manage risk through sophisticated models, impacting investor behavior and market dynamics. Falk-Wallace dives into the intricacies of position sizing, the balance between data-driven strategies and market momentum, and how momentum investing can pose unique challenges. His expert perspectives offer a captivating view into the evolving landscape of risk management in hedge funds.
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ANECDOTE

Career Path

  • Rich Falk-Wallace started on the buy side in investment banking, later working at Silverpoint, a credit-distressed hedge fund.
  • He then transitioned to Viking Global and Citadel, where he managed a global materials and natural resources portfolio.
INSIGHT

Investment Styles

  • Value-oriented funds like Silverpoint conduct deep research, focusing on long-term fundamentals and catalysts.
  • Multi-strategy funds prioritize turnover and risk limits, focusing on shorter-term opportunities.
INSIGHT

Multi-Manager Structure

  • Multi-strategy funds employ analysts with specific industry focuses, overseen by portfolio managers.
  • Stock picking involves detailed modeling, earnings projections, and understanding the coverage universe.
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