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• Case | HBS Case Collection | August 2019

  Paradigm Capital Value Fund

  Luis M. Viceira and Elena Corsi

  Karl Jan Erick Hummel had founded Paradigm Capital Value Fund in 2007 together with Columbia Business School Professor Bruce Greenwald, an expert in value investing and now chairman of the fund. The fund followed the principles of value investing to their target universe: publicly traded companies with market capitalization between €100 million and €4.5 billion based in Germany, the Nordic countries, the U.K., and Ireland. Hummel and Greenwald believed they had developed an investing edge in that universe, ignored by large U.S. and U.K. based funds, through deep research and by locating their headquarters close to companies and their management. Hummel and his team of six analysts were based in a small suburb of Munich, Germany. Paradigm Capital Value Fund was highly concentrated, with 60% of its assets invested in four stocks, and held its positions for long periods of time. Hummel had to decide if it was time to divest from one of their main investments, a German manufacturer of roll-over car washing systems, and instead invest in a German truck equipment supplier. At the same time, Hummel was concerned by how to grow the fund.

  Keywords: Investment Activism; Investment Portfolio; Financial Management; Growth and Development Strategy;

  Citation:

  Viceira, Luis M., and Elena Corsi. "Paradigm Capital Value Fund." Harvard Business School Case 220-014, August 2019.  View Details

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• Case | HBS Case Collection | August 2019

  Sustainable Investing at J.P. Morgan Private Bank

  Sara Fleiss and Luis Viceira

  Citation:

  Fleiss, Sara, and Luis Viceira. "Sustainable Investing at J.P. Morgan Private Bank." Harvard Business School Case 220-016, August 2019.  View Details

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• Article | Review of Financial Studies | June 2019

  Social Risk, Fiscal Risk, and the Portfolio of Government Programs

  Samuel G. Hanson, David S. Scharfstein and Adi Sunderam

  We develop a model of government portfolio choice in which a benevolent government chooses the scale of risky projects in the presence of market failures and tax distortions. These two frictions generate motives to manage social risk and fiscal risk. Social risk management makes attractive programs that ameliorate market failures in bad economic times. Fiscal risk management makes unattractive programs that entail large government outlays at times when other programs in the government's portfolio also require large outlays. We characterize the determinants of social and fiscal risk and argue that these two risk management motives often conflict. Using the model, we explore how the attractiveness of different financial stability programs varies with the government's fiscal burden and with characteristics of the economy.

  Keywords: Risk Management; Government and Politics; Programs;

  Citation:

  Hanson, Samuel G., David S. Scharfstein, and Adi Sunderam. "Social Risk, Fiscal Risk, and the Portfolio of Government Programs." Review of Financial Studies 32, no. 6 (June 2019): 2341–2382. (Internet Appendix Here.)  View Details

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