From the July/August 2013 issue of Futures Magazine • Subscribe!

Kathleen Kelley: Learning from the “old” boys how to seize opportunity

FM: You started your firm in what may be one of the toughest times ever to launch a fund. Tell us what it’s been like and your vision for the firm.

KK: It’s not that different from what I’ve done all along, though. I was lucky enough to work for probably the two nicest guys in the hedge fund business (Paul Tudor Jones and Mark Kingdon), and they are arguably the two most intellectually curious also. I have a strong idea of what I want this to look like and a great model for it, too. This is the chance to do something on my own and have it be based on what I’d seen before for some pretty impressive firms.

FM: When it comes to an investor’s portfolio, who is the ideal investor for you? Where do you fit in, say, a typical high-net-worth portfolio? What do you complement or set off?

KK: The irony is that, even for a corporate investor that has high commodity exposure, we’re a pretty good fit. Even though we have a lot of our risk in commodities because we tend to be agnostic to direction, we also tend to be negatively correlated with commodities. We have a different approach. For people who are looking for something slightly different in their portfolios, we make a lot of sense too. But probably the biggest telling point is our risk management because the process we use is put in place so we try to avoid double-digit drawdowns. [Therefore], we’re not going to see the big commodity blow-up that so many have lived through. 

FM: What advice would you give to traders just starting out, and also those looking to start their own funds?

KM: Find markets that you really think you have an edge in and that you understand better than anyone else and stick to those markets. Don’t try to be a credit trader and an equities trader and a commodities trader. You need to find the area where you have an edge and stick to that. We don’t trade any equities because we have no edge whatsoever. Even though I understand the commodities markets really well, I wouldn’t trade the commodities equities at all because I don’t have an edge in evaluating management teams.

For a fund, you have to find experienced people that have spent their careers in the position that you want to fill. It’s a very difficult thing to find those people because you have to find those who are entrepreneurial enough to want to go to a start-up. Finding the right people is definitely one of the big struggles but [it gives you]  a lot more flexibility. Obviously there are all sorts of reasons to [start a fund] but the hiring and the human resources really [are] the most difficult [part].

FM: What do we need to do to get more women in the business, especially women traders and portfolio managers?

KK: We need to see more women in the business. And the way for that to happen is that people should invest in women-owned firms because unless your daughter turns on the TV and sees somebody doing it who looks like them, they’re probably not going to do it. Unless they have a mentor, like Paul, like I had. So, we should be investing in more women-owned firms and we should make sure that our daughters and nieces and friends all take math and science courses because that’s what you need to do this job.

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