From Hum to Hedges:
While Reed is perhaps better known for producing scholars than finance moguls, Reedies who have gotten into the hedge fund business at all levels say the intellectual rigor of their undergraduate days isn’t all that different from what’s required for success in this specialized corner of the finance industry.
Reedies have been getting into hedge funds from the early days of their popularity (see sidebar, “The Mintz Legacy”). The current cohort ranges from veteran financial types such as George James ’77, co-chairman of the college’s investment committee and a co-founder of Old Lane Partners, a multi-billion-dollar hedge fund firm, to Provo Roellich ’07, who plans to parlay a recent summer internship into a full-time job at Grifphon Asset Management, a small Portland hedge fund run by Yusaf Jawed ’91.
Seattle venture capitalist Michael Tippie ’80 has never worked for a hedge fund, but he’s not surprised that other Reedies have gravitated to investing, and, in particular, running their own funds. Tippe, who helped coordinate the Reed Entrepreneurs Network, thinks that working the edges of high finance is a natural consequence of the college’s high standards.
“The whole process, in addition to cranking out great academics, is a crucible for an entrepreneur,” he says. “You’ve got to be ruthlessly honest, you’ve got to be a risk taker. It’s a phenomenal training ground for that, but nobody ever talks about it.”
It was an ad hoc economics lesson from math professor Hugh Chrestenson that turned the life of George James, then an aspiring young mathematician, toward investing. “He showed me 50 applications for an assistant professorship opening at Reed,” James remembers. “He said there was more supply than demand, so I figured I should go out and get a job someplace.” James pursued an M.B.A. and Ph.D. at the Wharton School of the University of Pennsylvania. The M.B.A. took; the doctorate didn’t.
James embarked on a successful Wall Street career that has culminated in the rise of Old Lane Partners. While he picked up the techniques needed to prosper in the complex world of fixed-income and derivatives in 24 years with global investment bank Morgan Stanley (much of it spent in London), James says the basics came from Reed’s labs and conferences. “Reed teaches everyone how to think critically and completely, and I think that’s a fairly unusual skill set,” he says. “It’s pretty characteristic of Reedies, but a lot of other guys don’t get it. I learned how to appreciate a very intelligent and very diverse community, and the derivative business is mostly populated by super-smart salesmen and rocket scientists.”
Hedge fund manager Chris Wolf ’77 says he has been well served by the rigorous analytic conditioning that helped him get through Hum 110 conferences and complex biochem experiments. In fact, it was a contentious conversation with chemistry professor John Hancock (1929–1989) that put him off his pre-med studies and sent him on an unexpected career path into money management. When Wolf told Hancock he was contemplating a one-year break from Reed, Hancock responded that it would be a waste of Wolf’s time and talent. “I remember telling him with a straight face that I would work an extra 10 minutes a day for the rest of my life to make up for it,” Wolf recalls. “He had no sense of humor about it.”
Wolf took the year off anyway, biked across Central America, and never came back to Reed. He eventually finished his B.A. at Ohio Wesleyan University and headed to the Yale School of Management in 1981, arriving just as “M.B.A.” and “Wall Street” became household words. Wolf made his mark at investment firm Kidder Peabody, and has since co-founded Cogo Wolf Asset Management, a $70 million fund of hedge funds based in San Francisco. “A lot of Reed students who go into business wind up doing things a little differently,” he observes. “In our field, taking a different approach has very strong benefits in terms of the ultimate goal, which is performance. If you do what everyone else does, you’re guaranteed a mediocre performance for your customers.”
For Yusaf Jawed ’91, founder of Portland’s Grifphon Asset Management, the path to hedge funds came through work at local stock brokerages, something the Bangladesh-born political science major wouldn’t have predicted during his long nights helping draft a revised community constitution for Reed in 1990–91. After a half-decade immersing himself in equity sales and research, Jawed, who is married to fellow Reedie Fernanda De Clercq ’92, says he was burned out and ready for a different type of challenge. As he prepared to start studying for a Ph.D. in history, a former colleague asked him what it would take to keep him in the business.
“Form a bloody hedge fund and maybe I’ll come back,” Jawed said. The pitch worked, and when Sasquatch Capital (the name came after a couple of beers) folded its tent at a profit, he thought running his own shop was the next logical step.
Grifphon now has about $50 million under management—small by hedge fund standards, but a staggering sum to imagine as a child growing up in a single-parent home in Bangladesh. The hedge fund’s name was suggested by Jawed’s mentor in college politics, English professor Robert Knapp (Grifphon is Chaucer’s spelling). The firm looks at the potential effects of world political and economic developments on stocks that the fund might buy.
“I try to manage [investors’] money the way I’d manage my own money,” he says, “and all my money and my wife’s money is in the funds of this company.”
It’s an ethos that appeals to James Ramos ’06, who is now a research analyst at Grifphon. Ramos, 24, cultivated an interest in stocks during his early days at Reed. Though he switched his major from economics to religion and wrote a thesis on the 19th-century Zionist philosopher Moses Hess, Ramos says he was less focused on academic studies than some of his classmates. On a Reed trip to Russia, Knapp saw Ramos reading a book by hedge fund icon George Soros and mentioned Jawed’s fund. It led to an internship, then a job.
Provo Roellich ’07, a 22-year-old anthropology major graduating in December, turned a summer internship at Grifphon into a full-time job offer that starts once she turns in her thesis on Mexican microfinance. She spent the last several months working on the company’s client newsletters and tracking world political and economic trends.
“It’s fascinating,” she says. “It gives me a chance to look at the world in a global way, and I think any sort of financial management business really needs to do that.”
For Ramos, Grifphon has already been a great gig: he’s doing work many talented hedge fund aspirants don’t touch for years, making the firm’s four-hour Sunday morning investment conferences more pleasure than work. “It’s a very horizontal structure,” he says, in which veteran portfolio managers and new analysts routinely bounce ideas back and forth. “It’s very Reed-like. I never really get the feeling that I’m at the bottom working my way up.”
Update: October 2013
Yusaf Jawed Sentenced
Yusaf Jawed 91 was sentenced in September 2013 to six and a half years in a federal prison after pleading guilty to felony charges that a hedge fund he controlled was little more than a Ponzi scheme. Prosecutors alleged that Jawed, owner and manager of the Portland-based Grifphon Asset Management, swindled investors out of $6.4 million between 2008 and 2009. According to the government, the money was either lost or not invested. Jawed pleaded guilty in April to five felony counts of mail fraud and 12 felony counts of wire fraud. The sentence includes a roughly $6.4 million judgment to repay investors. In addition, Jawed has agreed to pay nearly $34 million to settle a civil lawsuit brought by the Securities and Exchange Commission that includes roughly $27 million in principal and $7 million in interest. At the sentencing, Jawed apologized to his family and investors, promising to atone for it for the rest of my life. For more details, see article in the Portland Business Journal.