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Alternative Investments

Program:

First Offered:

Typical Enrollment:

Credits:

Type:

Bachelor of Science (B.Sc.) in Finance

Fall Term 2017

~25

3

Elective

The course is an introduction to alternative assets and -investments. Broadly structured into three parts focusing on Venture Capital, Private Equity and Hedge Funds, it covers the most important individual alternative asset categories and investment strategies. Besides receiving a general introduction to the industry as well as its players and economics, students are exposed to a variety of technical concepts used in the alternative asset industry used for performance- and risk measurement or valuation. Wherever applicable, it incorporates material from the CAIA curriculum.

Selection of Covered Topics

Alternative Asset Markets

- Markets, Players and Economics

Venture Capital & Startup Investing

- Startup Economics, Venture Valuation

Private Equity Markets

- LBOs PE Real Estate, PE Fund Economics

Fund Performance Measurement

- NAVs, PMEs, IRRs, Fund Multiples etc.

Hedge Funds Trading Strategies

- Event, Macro, FI, Relative Value, Activism etc.

Hedge Fund Risk & Return Management

- Downside Volatility, Treynor & Sortino Ratios, VaR etc.

Textbook(s):

'Private Equity as an Asset Class'

By Fraser Sampson. Wiley.

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'Handbook of Hedge Funds'

By L'Habitant. Wiley.

MS Excel Icon.png

Excel

Modeling

Course

Simple Exercises in MS Excel, specifically for VC & PE (Fund) Valuation and Hedge Fund Return and Risk Measurement

Selected Student Feedback

"Very well organized, very well prepared, the material was presented in a very interesting way, and the overall structure of the course is different and unique."

Average Student Evaluations

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Description of Sample Slides

Lecture:

Subchapter:

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Class 2: Introduction to Alternatives

Subchapter: Investors and the Need for Alpha

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This sample lecture is a general introduction into alternative investments. Besides a market overview, the chapter uses the example of four major institutional investors (ADIA, Yale Endowment, Blackrock and CalPERS) and their multi-asset portfolio models to introduce the economics in alternative asset markets.

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A particular emphasis is placed on active- and absolute return investment approaches and on the inability of a '60/40' stock and bond portfolio to satisfy the risk- and return- needs of the institutional investors.

See Sample Slides Below

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This course contains multiple original findings, data sets and support material from my research.

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For the Venture Capital part I use: 

  • Original Certificates of Incorporation (CoIs) containing the contractual rules between VC investors and startups

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For the Private Equity part I use:

  • Original case studies on LBOs, using detailed information on all restructuring activities, cash in- and outflows, and legal documents collected across different research projects of mine

  • Limited Partnership Agreements (LPAs) to exemplify Limited Partnership structures and the dynamics between GPs and LPs in private equity, as e.g. compensation structures

 

For the Hedge Fund part I use:

  • Original research regarding hedge fund activism strategies, particularly bondholder activism

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The original documents are used to familiarize students with industry standards and practice, while the data points and findings are used to complement textbook knowledge and add (empirical) depth to anecdotal evidence and case studies.

See Sample Slides Below

Click to Enlarge

The slides are part of a subchapter of Class 6 (Private Equity Economics) and contain the in-depth LBO case study on the Warner Music LBO by Thomas H. Lee, Bain Capital and Providence Equity Partners. All case information originates from my research.

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