Voice of Experience: Judith Posnikoff, PhD, Co-Founder & Managing Director, PAAMCO

judithposnikoffBy Melissa J. Anderson (New York City)

“I think what I wish I had known when I was starting out was to be a little more flexible – to really jump into opportunities even if they’re outside the path I expected to follow,” began Judith Posnikoff, PhD, Co-Founder and Managing Director of Pacific Alternative Asset Management Company (PAAMCO).

Posnikoff began her career as an academic – and had intended to stay there, she explained, until one day she got a fateful call from a friend asking for help at his firm. That opportunity eventually led to a whole new career, she explained.

“Really look at opportunities, even it seems way out of what you considered before,” she added.

From Academic to Co-Founder

“It’s a little bit unusual,” Posnikoff said. “I had planned to be an academic. I got my PhD in Financial Economics and was teaching at a local university. Then someone I went to school with who had gone down a different path got in touch with me.”

Her colleague was working as Head of Research at a hedge fund-of-funds firm. “This was the mid ‘90s – he was so busy and he asked if I would help out.”

Posnikoff began working one day a week at the firm, putting together answers to investor questions about hedge funds and helping where she could. “We had one of the few hedge fund return databases at that time (built beginning in the early ‘90s), and we could use that data to provide answers.”

She continued, “And I liked it so much that when the school year started again, I didn’t go back to the university.”

In early 2000, she and three colleagues struck out on their own with the support of some existing pension fund clients to found PAAMCO. “I think being part of building this firm is my proudest professional achievement,” she said. “We were very early in that we were set up as a provider in managing hedge fund portfolios for institutions. Back in the early 2000s, most funds of funds were still focused on the high net worth space. But we were set up like any institutionally-focused asset management firm – for example, we required position-level transparency from the very beginning for any hedge fund manager hired by PAAMCO.”

Posnikoff said she’s also proud of the people the firm has helped develop over the years. “We’ve had twelve classes of associates come through and several have already made partner,” she added.

Hedge Fund Views

Posnikoff said she enjoys the pace of change working in hedge funds. “There’s something new in the hedge fund space all the time,” she explained.

“Part of it is that we continue to work on a lot of portfolios constantly. We primarily manage custom portfolios for clients – we want to do what is best for them, rather than pushing them into a commingled fund.”

She cited the trend toward larger hedge funds as a challenge for smaller firms. She continued, “A lot of institutions are making direct investments, and they tend to go into the biggest hedge funds that are out there. That makes it very difficult for start ups, but it creates a lot of opportunities too. We’ve always focused on smaller, emerging managers as that’s where we see some of the greatest return opportunities.”

Women in Hedge Funds

Posnikoff says the industry is great for women. “I think hedge funds, and funds of funds specifically, are great places for women. You’re not locked in like you are on a trading desk and you have the opportunity to move through the industry in a single firm or across firms.”

This enables women to adjust their work life needs as they care for families, she explained. “But it’s not just about women,” Posnikoff continued. “Today the same issues face fathers as well.”

“We try to have a very open, diverse firm and allow for flexibility. It’s not just something for women and mothers but for people who need it for whatever reason.”

She advises younger women beginning their careers to consider opportunities carefully – and also to choose their bosses wisely. “Ask, ‘what value can I get from working for that particular person, versus from the firm’ in the early days. What can you learn from them that will help you get further ahead?”

She continued, “And as you get older, your opportunities to do things seem to multiply, not just at work but outside work.”

For example, Posnikoff explained, board service can be incredibly enriching. “You meet a different group of people than you would normally interact with. That can help broaden your view of the world.”

Making time for these kinds of activities can be difficult, but it’s worth it, she believes. “Someone told me once that you never finish all the things that need to get done – so expect that, and try to take advantage of interesting things as they come along.”

In Her Personal Time

“I like to participate in community life through local organizations,” Posnikoff said.

She sits on the board of a performing arts foundation whose mission is to rebuild a historic theater on the beach close to her home, and she is also on the board of Defenders of Wildlife, a 65-year old national conservation organization whose mission is to protect wildlife and wild lands. Posnikoff explained that her father was active in wildlife conservation, particularly protecting California mountain lions, which led to her interest in the group.