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24 What it Takes to be a Great Hedge Fund Manager in Today’s Economy with Anders Lindell of IPM – 2of2

Anders Lindell of IPM on Top Traders Unplugged with Niels Kaastrup-Larsen

“Carry is really about picking pennies in front of a steam roller. The greedier you get, the closer to that steam roller your going to be.” – Anders Lindell (Tweet)

Welcome back to the second part of our interview.

In this episode we dive into the negative effect of greed on the market. Anders Lindell again shows his depth of knowledge as he elaborates on the nature of irrationality though the ages and how our markets today, really are rather stretched. This is a powerful episode, I really do hope you will enjoy it.

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In This Episode, You’ll Learn:

  • How the IPM model profited by choosing to position against the carry frenzy in Japanese Yen during late 2008
  • Risk factor analysis when selecting model attributes
  • What the more reliable indicator in the global economy is

“We’re not interest in the absolute level of carry per market, we’re interested in the deviation from the longer term average carry being delivered by a specific market.” – Anders Lindell (Tweet)

  • How their trading model works on overall, daily basis
  • “Stop-Loss” Positioning in the IPM strategy
  • Where IPM identifies value traps and optimizes their exposure to it

“When we design our risk factors, they are designed to be uncorrelated with each other.”  – Anders Lindell (Tweet)

  • The average length of trades at IPM
  • What drives the relationships that Anders explores to build models around
  • If Correlations structure matters when IPM decides on risk overlay to make market decisions

“I do like traditional valuation metrics. I think they are reliable, they make a lot of sense from a fundamental and theoretical perspective, but it can take significant time for them to play out.” – Anders Lindell (Tweet)

  • Why timing can be the largest challenge for their strategy
  • How Anders defines risk and how IPM controls the model and expected risk
  • The biggest fear Anders have in regards to unexpected market effects

“People may trade in or out or create trends and prices may deviate, you know, it is just noise over short time spans. We’re trying to step back and avoid that by specifically trading and holding trades over long periods of time.” – Anders Lindell (Tweet)

  • What is expected in regards to drawdowns in the IPM Global Macro Strategy
  • How to convey the needed confidence to investors during drawdowns
  • Risk Management/Risk Control model rebuilding

“Spend 1/3 of your time trying to understand what we do on the Alpha side. The other side you should spend on risk management and the other third you should spend on understanding our portfolio construction.” – Anders Lindell (Tweet)

  • How Anders Lindell identifies research processes which will over engineer and cause return issues
  • Succession planning as Anders sees it for IPM – Perception and Vision

“I’m not so sure that market/investor irrationality has increased over time. I think we feel that at the current time, but that’s only because our time window is so short. – Anders Lindell (Tweet)

  • The challenges for IPM and how overcoming them has helped to make them stronger
  • What Anders would suggest for investors to focus on
  • What it takes to be a great hedge fund manager in today’s economy

“One of the reasons for being systematic in the fist place is to avoid exactly this emotional behavior.”  – Anders Lindell (Tweet)

Sponsored by Swiss Financial Services and Saxo Bank:

Saxo Bank Sponsor of Top Traders Unplugged

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 “We need investors that have confidence in what we do based on knowledge of what we do and that can only be accomplished by complete transparency. The more client dialogue we have prior to the mandate, the better.” – Anders Lindell (Tweet)