In honor of International Women’s Day today, I’d like to shine a spotlight on an accomplished woman in the field of asset management. Women are severely underrepresented making up approximately 10% of the fund managers in the U.S. today. I spoke with Gwen Cheni, a talented portfolio manager working for a San Francisco-based hedge fund. She has a compelling life story and impeccable credentials. Underneath her drive to succeed is an overwhelming desire to give back to the community. She generously took the time to share her experiences with me and explained how, and why, she gives back to the community.
You started your career at Goldman, what drew you there and what was that like?
I got an offer from every bulge-bracket investment bank out of college, but the tech bubble-bursting jostled the markets and many groups on the Street morphed as a result. I ended up choosing Goldman because of the brand name and the quantitative nature of derivatives structuring; I wanted to prove to myself that I had the brains for it.
What was your biggest challenge?
Going from the university student setting to the trading floor is likely a transition for most. The trading floor is extremely fast paced, high pressure, and does not tolerate any mistakes. Quickly adapting to this environment took effort, but it’s also a valuable skill set to have. Without challenges, life would be quite boring.
Tell me a little about your background as an analyst. What industries did you cover?
After the trading floor, I started analyzing companies on the credit side, covering everything outside of financials and energy. It was a great experience because it was so broad and also gave me a solid foundation in parsing balance sheets and cash flow. I think part of the reason why I can quickly assess leverage, burn rate, and time to breakeven of a company is starting out on the credit side of the business.
What did you like and dislike about the companies you covered?
I’m not emotional or personal about the companies I cover; they are puzzles and I’m a natural problem solver. This out-of-the-box problem solving temperament has allowed me to help many management teams of the companies I cover. There was a book recently on billionaires. The author noted that the only commonality she gleaned from her interviews was that they were all able to take themselves out of the situation and almost be a fly on the wall and ask “what’s actually going on here?” For example, after digging through the cash flow generation and borrowing capacity of one company, I suggested to the CEO that he could actually go private to save on the $1-2 million per year extra expense of being a public company. Another company was planning to expand internationally. Combining my understanding of this company’s strengths and my knowledge of 65 countries through traveling, I suggested two countries where this company’s strengths would be amplified to become enduring competitive advantages.
Any humorous anecdotes?
Having a well-developed sense of humor definitely helps in this industry. I was fortunate to work with many convivial CEOs with extremely quick wits; thus I’ve had countless humorous moments. Most of the time I feel like the luckiest person in the world: I get to help the smartest people grow their businesses. One CEO got me good when he pointed to his CFO and exclaimed, “I gave him an unlimited budget … … and he exceeded it!” All the blood drained from my face and I turned white as a sheet as I struggled between shock and horror. Then he whispered, “just kidding,” and gave us the actual budget figures.
Observations about the companies and managements?
The wide range of companies and managements I’ve come across has given me a great mosaic of what works and what doesn’t work. What the investing greats say is true: understand how the business model makes money, and the people running the business.
“Investing is simple but not easy.”
What was it like being a sell side investment banking analyst?
Trial by fire: you don’t know what you are capable of until you are pushed. I learned how much I can work and how much pressure I can work under. Both are much more than I expected.
How did you get to where you are now?
A former boss started his own hedge fund and hired me as he gained more assets.
Tell me about the Pier 88 Investment Partners. What is your investment style and approach? What defines your approach?
There are two strategies at Pier 88: equities, and convertible bonds. The equities strategy focuses on the acquisition and innovation theme: we buy companies before they are identified as strategic assets. Large corporations have trouble innovating in-house and have relied more and more on acquisitions to stay relevant. This is particularly true in the technology sector. The convertible bonds fund is a long-only fund. The asset class has the most advantageous treatment in terms of capital for insurance companies, and historically on average participated two-thirds in magnitude during market rallies, while only one-third in market crashes, creating a favorable risk-reward profile. We also maintain our portfolio at an investment grade rating on average.
What areas of coverage?
Mostly technology in the equity strategy. All sectors in the convertible bonds strategy.
How do you gather information?
In the information age that we are in today, it’s imperative that we look at everything and quickly discern importance and relevance. My funnel is quite wide and I’m reading almost every waking hour. It helps that I’m obsessed about investing.
“I bought my first stock at age eleven. The joke is while other kids collected baseball cards, I collected stock certificates.”
Investing is a childhood hobby that turned into a career. The benefit of an early start and obsession is that I’ve now accumulated a list of over 200 investors and 400 companies and management teams that I respect. I actively track these investors and companies, in addition to overall macro and market news. What I track is also dynamic: markets today change faster than even five years ago. Moore’s Law, as it applies to financial markets, is shortening.
What constitutes “edge” (information advantage)?
It’s very difficult to get any informational advantage nowadays in the public markets because of Reg FD, and I very much welcome this even playing field. However, just because there can’t be an informational advantage, doesn’t mean there can’t be an analytical advantage. I find this challenge of out-thinking other players quite enthralling and captivating, possibly attributed to the puzzle-solving temperament noted earlier.
What is it like these days to be a woman in finance? Do you feel things are changing and women are more accepted?
There’s undoubtedly been progress from our grandparents’ generation. There’s also clearly still a way to go. I sincerely hope things are fundamentally changing instead of merely more hidden. What I like to keep in mind is a quotation by Booker T. Washington, “Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome.” If one has to do more to prove oneself, it only makes the challenge that much more rewarding.
What do you see are the biggest challenges for women in a male dominated industry?
I think discrimination might be a human tendency evolved long ago to protect us from the new, the different, and therefore the potentially dangerous. We all want to be surrounded by people similar to us.
“Don’t get discouraged. Find a way, go around, get help, but keep your eyes on your goal.”
Find a goal you are passionate about, because that passion is what will keep you going.
Last November Fortune wrote an article stating Only 10% of U.S. Fund managers Are Women – And That Number is Shrinking. Why do you think there aren’t more women running funds?
Many studies have shown women are actually better portfolio managers because they are better at managing risk. Several books interviewing the world’s best investors (almost all male) found the commonality to be downside protection (not losing money). The low representation of women in active portfolio management is likely a detriment to the industry. My hypothesis is that women aren’t given as many opportunities.
Did you / do you have a mentor? Or do you mentor anyone?
Not while at Goldman, but definitely at other points of my career. I’ve had two former managers who were wonderful mentors. Through compendious questions, one mentor early in my career got me to think very critically, delineate and verify assumptions, and reason rigorously from first principles. I’ve never been part of a formal mentor program; these relationships evolved on their own. I’ve been incredibly lucky that so many people have altruistically given me pointers and advice when I’ve had nothing to offer them in return. I firmly believe that people are fundamentally good because of these wonderful people that have voluntarily helped me. Maybe because I’m so grateful to them that I’ve always wanted to help others. While living in New York, I volunteered at Big Brothers Big Sisters, and also created a nonprofit delivering supplies to orphanages in developing countries. Talking to kids, showing them what’s possible, helping them paint a brighter future, so they strive for that future, have been really rewarding. I was at a talk with Naveen Jain recently. He said instead of saying take a horse to water, but you can’t make it drink, just make the horse thirsty. That really resonated with me.
If you could meet any female leader in the world, who would it be and why?
I have the utmost respect for many female leaders. Not only for what they’ve accomplished, but also their gravitas, grace, gusto, gumption and gallantry. This is by no means a complete list. Sandra Day O’Connor and Ruth Bader Ginsburg are pioneers in the Supreme Court. I’d love to hear how they’ve navigated the maze. Janet Yellen for her percipience and insight into the Fed. Angela Merkel for her uncanny ability to handle politics and disparate interests. Gro Harlem Brundtland and Aung San Suu Kyi on perseverance and playing the long game. Closer to home, the female executives in tech are trailblazers: Sheryl Sandberg, Marisa Mayer, Meg Whitman, Ruth Porat, Sarah Friar, Mary Meeker. These are the famous names, but I also view anyone who embraces challenges and perseveres as a leader. Many of the entrepreneurs I’ve come across are inspirations.
If you could go back and give your “younger self” any advice, what would it be?
Something a Navy Seal recently wrote: when your mind is telling you you’re done, you are only 40% done.
Do you have any advice for women wanting to get started in the business?
Nobody said it would be easy, but it will be rewarding. It’s a marathon without maps. Embrace the challenges – they make life meaningful.
What do you like to do for fun? Hobbies? Passions?
Keeping physically fit is important for a thinking job. I’m also passionate about technology, innovation and entrepreneurship. I’m on the Board of Advisors at Singularity University Accelerator and a Mentor Advisor at Galvanize. Using over 15 years of professional investing experience, I try to help entrepreneurs build and grow their companies. I’m also starting a nonprofit TechGather.org to unite the out-of-the-box thinkers together to find innovative solutions to big world problems such as the environment, basic health and poverty. I’d like to get to a point where I can give away 90% of my wealth to find and fund such solutions.
Throughout all you’ve accomplished in your career, what’s been your biggest learning lesson?
Embrace the challenges.
Anything else you’d like to add?
It warms my heart to see the amount of support and collaboration addressing social issues. The paths won’t be straight or easy, but we will figure it out. It’s easy to see the negatives, but if we pause and take a step back, there’s a lot of good in this world, a lot of wonderful people with big hearts silently improving our world in little ways.
Thank you Gwen.
About Gwen Cheni
Gwen is the Assistant Portfolio Manager on both the equity and convertible funds at Pier 88. Prior to joining Pier 88, Gwen was a Senior Equity Analyst at Brown Brothers Harriman, Lord Abbett, and a Research Analyst at Legg Mason Capital Management. She also worked as an Associate Equity Analyst at J.P. Morgan, and started her career as an Analyst at Goldman Sachs. She received her BA from Yale University with a major in Economics and minor-equivalent in Computer Science Electrical Engineering, where she graduated summa cum laude and Phi Beta Kappa. She received her MBA in four concentrations from The University of Chicago Booth School of Business with Honors. She is a CFA charterholder.
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