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.
Steve 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.