By Claire Makin
Stenham Asset Management owes a great deal of its success to
keeping out of trouble, says Kevin Arenson, chief investment
officer of the $3 billion fund of hedge funds operation. His
mantra is that avoiding risk is just as important as achieving
For Arenson, risk does not mean degrees of volatility. Risk
means the potential to lose money, and Stenham relies on a wide
array of tools to identify it, from quants crunching numbers to
a simple hunch that something is just not right with a manager
or a market.
"There is no magic to this. We are following a Warren
Buffett approach: avoid things you don't understand, avoid
fancy derivatives, and make sure you understand the risks,"
Stenham specialises in consistent returns with low
volatility, an achievement for which its funds have won many
awards, including the 2009 InvestHedge Long Term...