Incubating Ideas
Izenstark says that when he talks about alternatives, he is not interested in something that is locked up, such as private equity or many hedge funds. Instead, the firm has developed a think tank for alternative strategies and risk exposure to various markets.
The firm's investment department of six people, including two quantitative researchers, meets weekly in an effort to generate investment ideas to which IRON Financial might add value. The firm puts some of the new models to work in the market and incubates them with its own money to see whether they are viable. "Sometimes you have ideas that look like they would work in the market, but are actually impossible to execute," says Izenstark. "It's an inventor's shop. The difference is we try to do that with the capital markets as opposed to hard commodities, light bulbs or what have you."
In summing up IRON Financial's place in the market, Izenstark returns to his days as a floor trader. "Our competitive advantage is having these battle scars over time and then creating a culture of individuals in both management and the investment department that believe in that," he says. "The people who are going to work with us, especially on the investment side, are going to have this belief of needing to look at the downside and protect for downside. We like to be involved with people who have been in front of the freight train and not been able to get out of the way."