Financial mathematics research is an area of
study which is foreign to most of us. But not
to Steve Stevanovich, the founder and president
of Epsilon Investment Management, LLC, who recently
donated $7 million to the University of Chicago
for their Center for Financial Mathematics.
In return, the University has named the Center
after Stevanovich. U of C states that this facility
is the only such research center in the U.S.
(possibly the world) committed to financial
mathematics study.
Stevanovich is obviously still committed
to the University of Chicago, which awarded
him both a Bachelors degree in Economics (1985)
and an M.B.A. (1990). “The financial
mathematics program at the University of Chicago
is at the forefront of providing students
the necessary tools to filter and decode the
complexity of world financial markets.”
stated Stevanovich.
Robert Fefferman, a U. of C. professor and
the dean of the physical sciences department
said, “The Stevanovich Center will be
devoted to research, but certainly, the increased
contact between financial practitioners and
our faculty members will sharpen the focus
of our classroom instruction.” Another
University math professor and the founding
director of the Stevanovich Center and the
financial mathematics program, Niels Nygaard,
indicated that the Center will offer conferences
and workshops for both academics and industry
professionals.
In addition to improving the research activities
of the Center, part of the $7 million gift
will go to renovate the math and science building,
turning it into the research center, which
will become the home of the financial mathematics
program. The University of Chicago also has
a campus in Paris that is targeted to host
a major financial mathematics conference in
association with the Ecole des Hautes Etudes
en Sciences Sociales (the School for Advanced
Studies in the Social Sciences). The U. of
C hopes to make this an annual event, partnering
with other French schools in the future.
Stevanovich founded Epsilon Investment Management
in 2001. It has become a very successful global
capital structure arbitrage hedge fund firm.
It is not a coincidence that one focus of
the Center is to examine and evaluate the
causes of hedge fund failures. A hedge fund’s
strategies are focused on guarding against
financial downturns using a variety of options,
futures, and other techniques Their philosophy
is to overcome the results of the inherent
risks in all areas of investing. However,
even this combination of strategies fails
at times. One theory, that fund managers often
overlook some critical elements of investment
risk, is being researched by the Center.
Nygaard states, “We try to teach people
to avoid these pitfalls. It’s a very
dangerous world out there. There are so many
hedge funds that some of them are going to
be hit by extremely unlikely events. You better
be prepared for what you are going to do if
it does happen.”
Stevanovich is doing his part to foster knowledge
in the field of financial mathematics and
how it might help his endeavors and those
of other hedge fund managers around the world.
Founded ten years ago, the University of Chicago’s
Masters in Financial Mathematics program enrolls
about 100 students in the one year program.
Providing its graduates a Master of Science
degree, the U. of C. hopes to help them better
understand the vagaries and potential pitfalls
of the investment world.
