Andy Redleaf's guest appearances

Andy Redleaf

Capital Allocators – Inside the Institutional Investment Industry

Debtwire Radio

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The son of a physician and with a penchant for math, Andy Redleaf came upon options in high school, even before they were listed on the CBOE.  Post college, Andy landed in an option trading role and was making markets on the CBOE during the 1987 stock market crash. In his rendering, the introduction of stock index futures dramatically increased correlation among stocks and the creation of portfolio insurance left some investors short a put that no other investors were long.  In combination, this left the market vulnerable to such a sharp one day plunge in stock prices.  Our conversation considers market stress periods in the context of the neat mathematical models and their simplifying assumptions that may be enablers of these seismic events.We talk as well about Andy’s hedge fund career, first co-founding Deephaven and then founding Whitebox.  Both ventures were focused on exploiting mispricings in complex securities such as convertible bonds and the relative value between equity and corporate credit securities.  As the head of Whitebox for two decades, Andy oversaw the firm’s expansion into a global multi-strat fund that traded all asset classes and through periods of vol both high and low.  Our discussion brings to life the instability that Andy saw lurking beneath the surface of calm markets in the period prior to the financial crisis.  He shares his analysis of the wholesale mispricing of mortgage risk that was evident in the statistic that nearly 90% of the refinancings on New Century’s book increased the amount owed from the original mortgage.  This, Andy suggests, is an indication of a more desperate borrower.As we explore the important risk events that have helped shaped Andy’s philosophy on risk, we also pivot to the financial climate that is today.  Andy is skeptical that ultra-low interest rates are stimulative and sees the decline in interest rate income as a headwind for consumers who are trying to reach a specific financial goal through savings.  Today, Andy is principal of Park Financial Group, a firm finding opportunities to prudently lend in today’s climate of highly bifurcated credit allocation.  I hope you enjoy this episode of the Alpha Exchange, my conversation with Andy Redleaf.

The son of a physician and with a penchant for math, Andy Redleaf came upon options in high school, even before they were listed on the CBOE.  Post college, Andy landed in an option trading role and was making markets on the CBOE during the 1987 stock market crash. In his rendering, the introduction of stock index futures dramatically increased correlation among stocks and the creation of portfolio insurance left some investors short a put that no other investors were long.  In combination, this left the market vulnerable to such a sharp one day plunge in stock prices.  Our conversation considers market stress periods in the context of the neat mathematical models and their simplifying assumptions that may be enablers of these seismic events. We talk as well about Andy’s hedge fund career, first co-founding Deephaven and then founding Whitebox.  Both ventures were focused on exploiting mispricings in complex securities such as convertible bonds and the relative value between equity and corporate credit securities.  As the head of Whitebox for two decades, Andy oversaw the firm’s expansion into a global multi-strat fund that traded all asset classes and through periods of vol both high and low.  Our discussion brings to life the instability that Andy saw lurking beneath the surface of calm markets in the period prior to the financial crisis.  He shares his analysis of the wholesale mispricing of mortgage risk that was evident in the statistic that nearly 90% of the refinancings on New Century’s book increased the amount owed from the original mortgage.  This, Andy suggests, is an indication of a more desperate borrower. As we explore the important risk events that have helped shaped Andy’s philosophy on risk, we also pivot to the financial climate that is today.  Andy is skeptical that ultra-low interest rates are stimulative and sees the decline in interest rate income as a headwind for consumers who are trying to reach a specific financial goal through savings.  Today, Andy is principal of Park Financial Group, a firm finding opportunities to prudently lend in today’s climate of highly bifurcated credit allocation.  I hope you enjoy this episode of the Alpha Exchange, my conversation with Andy Redleaf.

Andy Redleaf, Principal, Park Financial Group

Debtwire senior legal analyst Richard Goldman sits down with Andrew Redleaf, founder of Whitebox Advisors, to discuss his ascent to the top of the distressed investing community.

The Inside Track, Episode 18 - Andy Redleaf

Andy Redleaf is the Founding Partner of Whitebox Advisors, a $5.5 billion multi-strategy hedge fund launched in 1999 with primary offices in the metropolitan hubs of Minneapolis, Austin, and Sydney, Australia. Before founding Whitebox, Andy spent twenty years trading options, for two years at Gruntal &amp; Comes mpany alongside Stevie Cohen, fourteen on the CBOE, and five as a Founding Partner at Deephaven Capital Management. He has an irrepressibly creative mind and, alongside his partners, writes one of my favorite manager letters.  Our conversation covers Andy's nuanced view of the evolution of trading markets and financial instruments over his forty-year career, including arbitrage trading in the 1970s and 80s, unintended consequences of the deregulation of trading commissions, segmentation of market participants, importance of liability management, growth of orphaned securities, and the pending shift from decentralized to centralized market systems over the coming years.   Learn More Join Ted's mailing list at CapitalAllocatorsPodcast.com Write a review on iTunes Follow Ted on twitter at @tseides For more episodes go to CapitalAllocatorsPodcast.com/Podcast   Show Notes 1:52 – Andy’s background and the founding of Whitebox 5:34 – The math of options in the late 70’s, early 80s  13:44 - The decentralization of markets 16:34 -  Andy’s transition into trading other strategies 18:31 – The launch of Whitebox 20:08 – The meaning of the firm name Whitebox 23:38 – An example of a transitioning security from one group of investors to another 28:31 – Has it gotten harder to find arbitrage opportunities 32:29 – The driver of the financial crisis 32:44 –  Gary Gorton, Misunderstanding Financial Crises: Why Don't We See Them Coming 34:28 – His purchase of a bank 38:17 – How he got involved in the structured credit markets 42:39 – What is that Whitebox does differently from others 47:14 – Principles that guide the investment activities he likes to take part in 50:03 – How will the financial system evolve over the next 10 years 55:29 – Closing questions

Andy Redleaf is the Founding Partner of Whitebox Advisors, a $5.5 billion multi-strategy hedge fund launched in 1999 with primary offices in the metropolitan hubs of Minneapolis, Austin, and Sydney, Australia. Before founding Whitebox, Andy spent twenty years trading options, for two years at Gruntal &amp; Comes mpany alongside Stevie Cohen, fourteen on the CBOE, and five as a Founding Partner at Deephaven Capital Management. He has an irrepressibly creative mind and, alongside his partners, writes one of my favorite manager letters.  Our conversation covers Andy's nuanced view of the evolution of trading markets and financial instruments over his forty-year career, including arbitrage trading in the 1970s and 80s, unintended consequences of the deregulation of trading commissions, segmentation of market participants, importance of liability management, growth of orphaned securities, and the pending shift from decentralized to centralized market systems over the coming years. Learn More Join Ted's mailing list at <a href="http://capitalallocatorspodcast.com" rel="nofollow" target="_blank">CapitalAllocatorsPodcast.com</a> Write a review on <a href="https://itunes.apple.com/us/podcast/capital-allocators-with-ted-seides/id1223764016" rel="nofollow" target="_blank">iTunes</a> Follow Ted on twitter at <a href="http://www.twitter.com/tseides" rel="nofollow" target="_blank">@tseides</a> For more episodes go to <a href="http://capitalallocatorspodcast.com/podcast" rel="nofollow" target="_blank">CapitalAllocatorsPodcast.com/Podcast</a> Show Notes 1:52 – Andy’s background and the founding of Whitebox 5:34 – The math of options in the late 70’s, early 80s  13:44 - The decentralization of markets 16:34 -  Andy’s transition into trading other strategies 18:31 – The launch of Whitebox 20:08 – The meaning of the firm name Whitebox 23:38 – An example of a transitioning security from one group of investors to another 28:31 – Has it gotten harder to find arbitrage opportunities 32:29 – The driver of the financial crisis 32:44 – <a href="https://www.amazon.com/Misunderstanding-Financial-Crises-Dont-Coming/dp/019992290X/ref=la_B00357E21I_1_1?s=books&amp;ie=UTF8&amp;qid=1522242744&amp;sr=1-1" rel="nofollow" target="_blank"> Gary Gorton, Misunderstanding Financial Crises: Why Don't We See Them Coming</a> 34:28 – His purchase of a bank 38:17 – How he got involved in the structured credit markets 42:39 – What is that Whitebox does differently from others 47:14 – Principles that guide the investment activities he likes to take part in 50:03 – How will the financial system evolve over the next 10 years 55:29 – Closing questions

Andy Redleaf - Evolution of Markets (Capital Allocators, EP.46)