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The Morning Brief: AQR’s Cliff Asness Tackles Climate Change

Clifford Asness, managing and founding principal of AQR Capital Management, isn’t worried about climate change. In a new paper titled “It’s Not The Heat, It’s The Tepidity,” outlined here by Fortune, Asness writes that while the global temperature does seem to be rising, it’s not happening as quickly as many people say. In fact, it will be another 500 years before climate change is a problem, write Asness and the paper’s co-author, AQR risk manager Aaron Brown. Asness, whose firm manages about $100 billion in hedge funds, long-only funds and other investment vehicles, reportedly asked journalists not to quote directly from the report, saying it was “very preliminary.” But Fortune gave some details, including Asness’ suggestion that, based on his reading of scientific data, rising sea levels and melting Arctic ice could simply be a sign that temperatures are increasing mildly, not an omen of dramatic climate change. Asness later tweeted a link to the Fortune article with this comment: “Not even close to what we said. We said you need a model not a temperature graph.” See for yourself here.


Charter schools have long been a popular cause with hedge fund managers, but a new report shows that lately this support has been closely connected to another favorite target of hedge fund contributions: politics. Hedge fund executives have donated nearly $40 million to political causes in New York alone in the last 15 years, and about $4.8 million of that went to Gov. Andrew Cuomo, a staunch advocate for charter schools, according to the New York Daily News. Carl Icahn, Julian Robertson Jr. and Daniel Loeb are among those known to be big backers of both the governor and his favored educational cause, the News reports. Loeb is chairman of the board of Success Academy, a popular — if controversial – charter school network in New York. Loeb, Robertson, Paul Tudor Jones II (founder of the Excellence Charter School in the Bedford-Stuyvesant neighborhood of Brooklyn) and others have reportedly contributed millions of dollars to groups such as New Yorkers for a Balanced Albany, which financed a campaign last year to keep Democrats out of the state Senate. Other hedge fund executives with charter school interests include Icahn, founder of several charter schools in the Bronx, and Joel Greenblatt, who helped found Success Academy.


Activist investment firm Marcato Capital Management has called for the replacement of Bank of New York Mellon CEO Gerald Hassell, with Marcato founder Richard (Mick) McGuire III writing in a March 10 letter that Hassell “does not recognize the magnitude of inefficiency at the company or the opportunities to drive growth and has little appetite to take the necessary actions to ignite real change,” according to CNBC.

BNY Mellon is in need of a major overhaul, McGuire argues, suggesting a shift in priorities and brand management that would be difficult to accomplish with the current executives in place. Change “starts with the CEO,” McGuire wrote in the letter. A BNY spokesperson defended Hassell to CNBC, saying that while the company welcomes input from shareholders, Hassell’s leadership has helped the firm “increase shareholder value, reduce costs, improve margins and streamline the organization, which our results clearly demonstrate.”


Point72 Asset Management is getting into the big data game. Point72 — essentially the family office of founder Steven Cohen, who shuttered his long-running hedge fund firm SAC Capital Advisors last year and paid record fines to settle insider trading charges against the firm — has hired about 30 employees since the beginning of 2013 to build quantitative trading models based on publicly available data, according to a Bloomberg report. Mark Herr, a spokesman for Point72, told Bloomberg that Point72 president Doug Haynes is spearheading the quant effort, called Aperio, and that the firm is looking for someone to head up the strategy. “The amount of publicly accessible data can now be compared to a fire hose of information,” Herr told Bloomberg. “People who can read the signals most accurately and analyze them are the ones who will generate returns.”

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