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Combining fundamental investing with a quantitative approach can be very fruitful.”
Greg Adams, Alger’s director of quantitative and risk management, has been in New York a long time but still thinks of himself as a California guy. He roots for the Los Angeles Dodgers, fondly remembers body surfing in the Pacific and has a more laid back style than most other investment managers, which he considers an advantage. ``Being able to step back and not get overly emotional is definitely helpful in investing,’’ he says. Greg differs from his peers in another way: he has an extensive background in quantitative investing, using mathematical tools to evaluate large groups of stocks whether for portfolio selection or for his role heading up Alger’s risk management function. On the surface the quant method may not seem like an obvious fit at Alger, known for its bottom-up stock picking. In fact, says Greg, the two styles complement one another, and in particular, are very helpful for analyzing Alger’s strategies. You might say, they give the firm the best of both worlds.
So did you have a classic California childhood?
I guess so. I grew up in Irvine in Southern California. It was an old ranch that was turned into a planned community, just in from the coast, three or four miles to the ocean. I still enjoy body surfing when I get the chance.
Is it a cliché to say you have a California personality?
It may be a cliché, but I definitely feel I am more easy going than most people and I bring a slightly different perspective to my work. In this business there is a lot of fire and ice, but I try to stay on an even keel. That can be a good quality in investing. It’s a field where you are going to be wrong at times and you have to be able to deal with that. It isn’t always easy to do.
Have you taken a quantitative approach to investing for a long time?
I was exposed to it in its early days after I graduated from Penn and Wharton in the late ‘80s while I was at my first job in a small group of equity researchers at a bank. We used a quantitative model that narrowed down the universe of stocks we wanted to examine. It helped us figure out which companies we found interesting and then we conducted fundamental research. Identifying characteristics that make a company compelling has always appealed to me. I like the idea of learning about companies, what makes them work, their new products, how trends are impacting them, where they fit in the economy, and how things are going to affect them moving forward. I appreciate the left brain and right brain aspects of this work.
Did you come to Alger with the idea you would bring a quant perspective with you?
The firm wanted to add some quant skills and risk management tools to the process. While Alger is and will always be 100 percent fundamental research-driven, the quant approach can help me in my dialogues with our portfolio managers when we meet as I discuss the type of risk and opportunity that exists in their portfolios.
So you are a believer that using the two styles can make you a better investor?
That’s right. A fundamental investor can come up with insights that a model can never pick up, like what is going on with an individual company or how big changes are reshaping an industry. On the flip side, a quant model might give an investor a new line of inquiry to consider. Combining the two can be very fruitful.
Where do you do your best thinking?
I like to get into the office early, about 7:45 AM, before the markets open. It gives me a chance to do some reading and thinking. On the way home on the train I do the same thing. When I get off the train, I have a 10- or 15-minute walk home. That’s always good thinking time as well.
What are some of the things you do outside the office?
I’ve always been interested in music. In college I used to go to shows all the time and when I moved to New York my friends and I used to see bands regularly. I still enjoy doing that. My taste is fairly eclectic. I enjoy indie rock, R&B, jazz, and even classical. I like going to see people who are passionate about the music they make.
Does your family share your passion?
My wife enjoys going to shows, and over the past few years or so my youngest daughter, who is 16, has become more of a music fan. I’ve gone with her to a couple of big shows at Madison Square Garden when the seats were good. She doesn’t seem to mind when dad takes her with a friend to a concert. And I like going to the show as opposed to just waiting for her outside.
What about sports?
I watch a lot of baseball and basketball at night. I am still very much a Los Angeles Dodgers fan from my youth, but from my years in New York, I have unfortunately developed a soft spot for the Knicks, the New York basketball team. I’ve also been involved for a long time with a fantasy rotisserie baseball team. A core group of us, about six or seven guys, has been with it from the beginning. This would be our 22nd year if there is a season.
Do you play any sports?
On Fridays I unwind by doing a little boxing. I’ve been doing it now for about ten years. I work out with a trainer and do some occasional sparring. When you are sparring you are totally focused on it, and for me at least, protecting yourself. I find it clears the head. It relieves the stress, which is why I like to do it at the end of the week.
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