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					            1231.3373.11 – Alternative Investments
                                 Semester B – 2012

Lecturer:           Mr. Eran Peleg, CFA &KCPS Team             Phone:           03-777-9000
Course Time:        Thursdays 15:45-17:00                      Classroom:       Recanati 253

Course Coordinator/Assistant:          Ariel Irwin, KCPS       Phone: (03)640-9203

Course Objective:
Alternative investments have received growing attention among international institutional
investors over the past two decades. In Israel, institutional investors, such as investment
houses, insurance companies and pension funds, have been allocating a growing proportion
of their investment portfolios to alternative investments as well. The course objective is to
introduce alternative assets and their role in a diversified investment portfolio, to present an
overview of the maintypes of alternative investments – hedge funds, private equity,
commodities, real-estate and corporate governance – and to provide students with an
understanding of this exciting investment area and analytical tools for examining these
investments. Students who will complete the course should be familiar with the common
concepts of the alternative investments world and will have acquiredvaluable practical tools
highly relevantwithin the investment industry.

Course grade to be determined as follows:
             Class participation – 10%
             Final test – 90%

Course outline:
March 15, 2011: Introduction to alternative investments
        Definition and types of asset classes
        What distinguishes alternative investments from traditional asset-classes
        What role can alternative investments play in a diversified portfolio – strategic
           versus tactical allocation
        Required Reading: Anson, Chapters 1-2
March 22, 2011: Introduction to hedge funds
        What are hedge funds - definition and history of the industry and its evolution
        Hedge funds vs. mutual funds
        Hedge funds - risk/return characteristics
        Hedge fund strategies
        Required Reading: Anson, Chapter 3

March 29, 2011: Investment in hedge funds
        Establishing a hedge fund investment program
        Selecting hedge fund managers
        Due diligence for hedge fund managers – strategic and operational
        Risk management – additional hedge fund risks
        Regulation of hedge funds
        Required Reading: Anson, Chapters 4-5

April 19, 2011: Spotlight on Hedge Fund Strategies
         Systematic trading
         Long/short equity
         TBD

May3, 2011: Private equity – Part I
        Introduction – concept, history of the industry, and legal investment structures
        Strategies - venture capital, growth capital, leveraged buyouts, infrastructure
        Private equity performance
        Performance measurement for PE
        Advantages and disadvantages
        Leveraged buyouts in practice (speaker)
        Required Reading: Anson, Chapters 17, 21

May 10, 2011: Private equity – Part II
           Venture capital (speaker)
        Required Reading: Anson, Chapter 16

May17, 2011: Private debt
           Israeli-government sponsored ‘Manof’ funds (speaker)
           Investments in distressed debt (speaker)
           Required Reading: Anson, Chapters 18-19

May 31, 2011: Commodities
            Introduction to commodities
            Why invest in commodities (in a portfolio context)?
            Historical risk/return characteristics
            How to get exposure to commodities?
            Group hedge fund case studies – materials to be handed-out. Each group of
           students to receive information about a hedge fund on which they will be
           required to perform due diligence
            Required Reading: Anson, Chapters 12-15
June 7, 2011: Corporate governance and alternative investments
         Quick review of the agency problem
         How alternative investment strategies deal with the agency problem: leverage
            buyouts, distressed debt investing, debtor in possession, investor activism,
            equity alignment in hedge funds (also versus mutual funds).
         Required Reading: Anson, Chapter 26

June 14, 2011: Real estate
            Introduction - real estate investment sectorsand strategies
            Historical risk/return characteristics
            Advantages and disadvantages
            Real estate investment in practice (speaker)

June 21, 2011: Course conclusion

Eran Peleg – Bio:

Eran Pelegis Managing Partner of KCPS’ asset management and investment advisory group.
Prior to joining KCPS, Mr. Peleg served as Head of International Investments for Gmulot, a
premier Israeli institutional investment house, where he led $1.5bn of investments in global
financial markets across a variety of asset-classes. Prior to Gmulot, he was Senior Investment
Manager for Gartmore, an international asset management firm based in London, where he
had $2.5bn of assets under direct management and served on the firm’s Fixed Income Policy

Mr. Peleg received his B.A., cum laude, in Economics and Philosophy from the Hebrew
University of Jerusalem and his M.B.A. from Oxford University. He is a CFA charter holder
and a Licensed Portfolio Manager registered with the Israel Securities Authority.

About KCPS and Company:
KCPS and Company is an international asset management group, headquartered in Tel-Aviv,
with offices in New York City and Geneva. KCPS provides investment management solutions
to institutional and private investors globally. KCPS and Company is involved in various
investment activities including private wealth management, Institutional advisory and asset
management, hedge funds, distressed debt and private equity.
Reading List:

Mark J. Anson, Handbook of Alternative Assets, Wiley Finance, 2nd edition (September 1st,
Recommended (Not required):
   1.         David F. Swensen, Pioneering Portfolio Management: An Unconventional
       Approach to Institutional Investment, Free Press, 1st edition (May 15th, 2000).
   2.         M. Barton Waring and Laurence B. Siegel, The Myth of the Absolute-Return
       Investor, Financial Analysts Journal, Volume 62, 2006.
   3.         Russell Investments, The 2007-2008 Russell Survey on Alternative Investing.
   4.         Alexander Ineichen, Kurt Silberstein, Roadmap to Hedge Funds, Alternative
       Investment Management Association, November 2008.
   5.         Clifford S. Asness, The Future Role of Hedge Funds, CFA Institute Conference
       Proceedings Quarterly, 2006.
   6.         Stephan J. Brown, Thomas L. Fraser and Bing Liang, Hedge Fund Due Diligence:
       A source of Alpha in a Hedge Fund Portfolio Strategy, Working Paper, January 2008.
   7.         Alon Brav, Wei Jiang, Frank Partnoy and Randall S. Thomas, The Returns to
       Hedge Fund Activisms, Financial Analysts Journal, Volume 64, 2008.
   8.         Sheridan Titman and Cristian Loan Tiu, Do the Best Hedge Funds Hedge? , AFA
       2009 San Francisco Meetings Paper, December 2008.
   9.         Hilary Till, EDHEC Comments on the Amaranth Case: Early Lessons from the
       Debacle, EDHEC Risk and Asset Management Research Center.
   10.        Greg N. Gregoriou and Francois-Serge Lhabitant, Madoff: A Riot of Red Flags,
       EDHEC Risk and Asset Management Research Center, 2009.
   11.        Tim Jenkinson, Understanding the Private Equity Phenomenon, CFA Institute
       Conference Proceedings Quarterly, 2009.
   12.        Charles G. Froland, The fortunes of Private Equity: What Drives Success? , CFA
       Institute Conference Proceedings Quarterly, 2008.
   13.        Robert J. Greer, The Role of Commodities in Investment Portfolios, CFA
       Institute Conference Proceedings Quarterly, 2007.
   14.        David W. Burkart, Commodities and Real-Return Strategies in the Investment
       Mix, CFA Institute Conference Proceedings Quarterly, 2006.
   15.        Mark A. Weisdorf, Infrastructure: A Growing Real return Asset Class, CFA
       Institute Conference Proceedings Quarterly, 2007.
   16.        James L. Kuhle, Portfolio Diversification and Return Benefits – Common Stock
       vs. Real Estate Investment trusts (REITs), The Journal of Real estate Research, 1987.
   17.        K.C. Chan, Patrice H. Hendershott and Anthony B. Sanders, Risk and Return on
       Real Estate: Evidence from Equity REITs, NBER working paper series, 1990.

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