Four UTC Finance students are in New York City this summer to intern at Galtere, Ltd, the commodities-focused hedge fund of Renee Haugerud. Ms. Haugerud’s support established the Galtere Institute: Finance for the Future Initiative at UTC’s College of Business. The Institute’s mission is to promote the art and science of trading and investing.
The blog posts are sent from our interns in New York as they are put to work at a global asset hedge fund and explore the city. Check in during the next few weeks to learn more about their experiences.
The City That Never Sleeps: posted by Stephen Reaves
Being here in New York has been a great learning experience.
As soon as we arrived in New York, our goal was to see some of the landmarks that we always hear about. The most impressive were: Freedom Tower, the Bull near Wall Street and the hordes of people around it and Fire Station No. 10 (first response for 9/11). All were great sites to see upon our first few hours in New York.
The following day we reported for our first day on the job. Our offices this year are shared between Queen Anne’s Gate Capital and Galtere, Ltd. Kathleen Kelly is the manager of Queen Anne’s Gate. She came and spoke to us one day and told us about some of her strategies. She deploys options on futures to track the position initially. After this, she takes a larger position in the specific futures position she chooses. She said she keeps an eye out for large price movements in particular assets due to speculators taking positions. During these times is when they take advantage and have potential to make big money. This has happened in palladium recently because of a South African mining strike and Russia hoarding their palladium supply. Speculators jumped into palladium hoping to capitalize on this news. The price of the precious metal reached a 13 year high! The next day, it dropped tremendously following reports that the mining strike may end soon. Huge money on the short side could have been made from this!
Ms. Haugerud is very interested in the psychology of trading and how neuroscience can affect markets. We’ve read several articles on this topic and I find it very interesting. One area of interest within this topic is funds that are run by women. Female-run funds tend to not lose as much money during volatile times and research indicates that can be attributed to differences in brain chemistry—women have lower levels of testosterone in their bodies and tend to make less risky investment decisions. There is a movement to promote pension funds run by women as a result of some of those studies. There is even an ETF in the works that invests exclusively in corporations run by women.
As part of our internship experience, we were given a portfolio to “roll.” We closed out positions and then entered into new ones. We had to get out of a contract by the first notice date or the physical asset would be delivered to us. We can’t have 1,000 barrels of unprocessed crude oil coming to the doorstep! We have been learning how to identify the “active” contract, which is the contract with the most open interest on it. There are more contracts to trade in the active month. We also learned that in currency trading, speculators usually buy one month forward. We have been calculating forward rates and learning the basics of being a portfolio manager. Rolling positions is something many people do not know how to do.
Renee had spoken with Paul Tudor Jones, and he said he would hire someone straight out of college if they knew how to roll positions and perform basic portfolio management techniques. That is a glimpse of what we have been doing here. We head for Minnesota on Monday and will be taught by Renee in multiple sessions. I will be sure to take many notes because of her legendary status!!