Department of Finance Alumni Conference and Reunion

On Saturday 21 April 2012, the Department of Finance hosted the first Alumni Conference and Reunion for alumni of the three MSc Finance programmes. Over 50 students from previous cohorts of the programmes attended the event during the day and in the evening, along with members of the Department’s academic faculty and administrative team who have been involved with the programmes over the years.

The day opened with an introduction from Janet Bacastow, the Associate Programme Director for the MSc Finance, who welcomed all the participants and noted that the Department was delighted to see so many of its alumni back at LSE, including representatives from the very first cohort of 36 students who joined the Part-time programme in 2006. Since that time, Janet reflected, the programme has grown considerably and has gone from strength to strength. The creation of the MSc Finance (Part-time) was followed in 2008-09 with the first cohort of students on the MSc Finance (Full-time), and again in 2010-11 with the introduction of the MSc Finance and Private Equity programme. With the expansion of the programmes, the number of students studying MSc Finance within the Department has continued to grow, creating a rich and diverse body of students and alumni. It is the participation of students during their time at LSE which contributes greatly towards the success of the programme, and it is hoped that this contribution will continue to form the basis for a wide and well-connected alumni network – and many more alumni events in the futu

Following Janet’s introduction and welcome, the first of the day’s formal presentations was given by Professor Dimitri Vayanos on the subject of ‘A Theoretical Analysis of Momentum and Value Strategies’. Professor Vayanos began by noting that over the past 20 years, important academic research has been carried out seeking to understand market anomalies and patterns of return predictability. He then gave an overview of some of the work that is currently being undertaken at the LSE within the Department of Finance and the Paul Woolley Centre for the Study of Capital Market Dysfunctionality. The wider goal of this research is to understand how well financial markets work and contribute to society, and whether or not they are dysfunctional – it was noted that this very question had been hotly debated when the name of the Paul Woolley Centre was being decided! Professor Vayanos went on to discuss in more detail his and colleagues’ recent research specifically relating to the areas of momentum, reversal and value, and how these anomalies can derive from flows between institutional investors. Professor Vayanos discussed the evidence presented in recent papers, including ‘A Flow-Based Explanation for Return Predictability’ (Lou 2011) and ‘Connected Stocks’ (Anton and Polk 2011), which shows that institutional flows can help explain market anomalies, and in ‘An Institutional Theory of Momentum and Reversal’ and ‘A Theoretical Analysis of Momentum and Value Strategies’ (Vayanos & Woolley, 2011), which propose a theoretical framework showing how the anomalies can derive from institutional flows, and how investors should manage their portfolios in inefficient markets.

Following the lunch break, the day’s programme continued with a panel discussion on ‘The Euro Crisis’, chaired by Professor David Webb, with participation from Dr Vicente Cuñat and Professor Vayanos. The panel sought to discuss, with reference to the current economic contexts of Spain and Greece, some of the key issues underlying the current economic instability facing Europe and the euro, and to consider the impact of recent economic and political developments in this area. Dr Cuñat began by giving an overview of the current situation in Spain, discussing the problems within the Spanish banking sector and the wider economic and political issues that the government is encountering in seeking to redress these difficulties. Professor Vayanos then followed with a short overview of the problems in Greece, in particular discussing the underlying nature of the Greek economy before and after 2008 and the causes and effects of the present crisis. The panel debate generated a number of questions and thoughts from the audience, including consideration of how the result of the French presidential election might affect the future direction of Europe and the euro, and whether leaving the single currency could be a viable option for Greece.

After the panel discussion, Dr Ulf Axelson provided a short review of the MSc Finance and Private Equity Programme, which was created in 2010-11 as the world’s first master’s programme specialising in private equity. The programme was set up following a generous donation to the LSE from Arif Naqvi of Abraaj Capital (himself an alumnus of the LSE) to foster the research and teaching of private equity. The programme is now into its second full academic year, and is based on an applied approach to teaching, which emphasises interaction with the real world through studies of case examples and the participation of numerous practitioner seminars.

The succeeding events of the afternoon sought to provide wider opportunities for participants to network with each other and consider potential career development. Richard Smith, of consultancy Haskett Smith, gave a presentation providing advice and guidance for career development within the financial sector. Some of the points raised included: how to approach career management and maximise chances for success; how to develop networking skills to build a profile and potentially learn of new career opportunities and how to avoid the common pitfalls that can derail career progression. Ruth Sutton, of LSE’s Office for Development and Alumni Relations, then followed with a short overview of the many opportunities that are provided through LSE’s extensive alumni groups and alumni network to make new contacts, keep in touch with classmates and keep in touch with LSE.

The main programme of the day was concluded by the plenary speaker, Tim Frost (Director, Cairn Capital), who gave a talk covering his ‘Lessons Learned from 25 Years in Finance’. The talk was lively and informal, emphasising many of the important factors that have contributed to his successful career in the financial sector, particularly the importance of fostering creative and original thinking within organisations and encouraging a culture of diversity where people can feel free to provide an original point of view. Tim noted that this was very much the ethos of LSE (of which he is both an alumnus and a Governor), and that he had found it to be equally important throughout his subsequent career. The talk provided nuggets of career advice and then prompted questions from the audience covering Tim’s own experiences over the years and his views on future developments within the financial sector.

The day’s events concluded with a drinks reception and dinner for all participants, at which Professor Webb gave a short speech highlighting how pleased the Department had been to be able to hold this event, and emphasising that it was hoped that this would be the first of many such events in the future, as part of the Department’s ongoing efforts to build a strong and engaged network of current students and alumni.