The Yale School of Management (SOM) is among a handful of other schools in the New York area that have begun to offer students a course in hedge fund operations and management taught by someone with real-world experience, according to a recent article in the New York Times.
At most business schools, students can study aspects of hedge funds in classes like investment management, financial engineering, endowment management and entrepreneurship, the Times reported. But at Yale SOM, students study under Leon Metzger, an 18-year industry veteran and founder of Paloma Partners, one of the “granddaddies” of the hedge fund industry, the Times continued.
In a syllabus modeled after an offering memorandum for a hedge fund, Metzger advises students interested in learning the secrets of moneymaking to register for a different class.
His is grounded in current events and practical application of theory. As an example, the Times reported that a class devoted to valuation involved a three-hour discussion of Merrill Lynch’s sale of $30 billion of collateralized debt obligations to the Lone Star Funds for 22 cents on the dollar and financing support.
“Talking about valuations is slightly more interesting than watching grass grow or paint dry, but talking about this sale brings the topic to life,” Metzger told the Times.
Other class exercises put students in front of real-life hedge fund insiders, who judge the students’ presentations of their mock hedge funds. Jacob Navon, an executive recruiter who served as one such judge, praised the Yale SOM class for teaching students presentation and other practical skills. “That’s an angle not uniformly taught,” he told the Times.
Yale SOM dean Sharon Oster told the Times that she views teachers like Metzger with real-life experience as providing a valuable complement to the academic curriculum.
Other New York-area schools, including New York University, Columbia and Cornell, are doing the same, according to the Times report. Still other schools recognize the need to include a focus on hedge funds as part of a complete business school education.
“Hedge funds have become such a big factor in financial markets that in order to make sure your students’ knowledge base is current, you really have to cover hedge funds somewhere in the curriculum,” Andrew W. Lo, professor at the M.I.T. Sloan School of Management and director of the M.I.T. Laboratory for Financial Engineering, told the Times.
In fact, at Yale SOM, few of the students in Metzger’s class plan to pursue careers in hedge funds. “I knew a long time ago what I was going to be doing, and it wasn’t hedge funds,” Yulee Newsome, a student in the class, told the Times. Newsome will join Dow Chemical when he graduates. “But it seemed to me that I would be pretty remiss if I left business school and didn’t know about one of the more important aspects of finance,” he continued.
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