Benjamin Eifert

Dr. Benjamin Patrick Eifert (born February 16, 1981) is an American hedge fund manager. He is the founder and chief investment officer of QVR Advisors, a San Francisco based hedge fund focused on derivatives and volatility strategies, with $672 million in assets under management, as of June 2020. The magazine EQ Derivatives describes the firm as running "QVR Absolute Return [...] a capacity constrained alpha strategy", and "QVR Solutions [...] custom separate accounts for institutional investors (e.g. tail risk hedging)." In an article about the blowup of exotic tail risk selling hedge funds in March 2020, Institutional Investor described QVR as a "Silicon Valley hedge fund QVR [that] specializes in quantitative vol" and named Eifert as "among this crisis’s Big Short-type investors — those who both called a collapse and turned it into a windfall."

Early life and education

Eifert attended Stanford University, graduating in 2003. He worked for the Chief Economist of the World Bank from 2003-05, during which he contributed to various published World Bank research. Afterwards he did a PhD in Economics at UC Berkeley, publishing research on management practices in Indian manufacturing firms.

Investing career

According to EQ Derivatives, Eifert started his investing career on the Wells Fargo proprietary trading desk, which later spun out into a hedge fund called Overland Advisors. According to Risk Magazine, he started the hedge fund Mariner Coria at Mariner Investment Group with Jonathan Loflin in 2013, which "exploits mispricings linked to structured products and derivatives end-user flows". Opalesque noted that "The managers focus primarily on equity, foreign exchange, and commodity derivative relative value trades, covering the U.S., Europe and Asia. They have risk buckets and categorize their strategies as volatility relative value, correlation relative value, dividend relative value, and "directional derivatives", which includes some delta-oriented derivatives and systematic strategies."

Business Insider reported that QVR's 2017 launch was backed by Irvine-based fund of funds PAAMCO. According to that article, at launch Tae Hong joined the firm from Uber and Scott Toyama from Wells Fargo.

In the subsequent years Eifert often discussed the structural shift in markets over the last several years away from option buying for hedging purposes and towards investor volatility selling for yield. He was interviewed on Bloomberg's Odd Lots podcast in January 2020, explaining how exotic structured products sold to retail investors in Asia can potentially cause havoc in US equity option markets in the event of a market selloff .

Bloomberg reported that QVR's Absolute Return strategy gained 50% in March 2020. The April 2020 Institutional Investor article about the carnage of the market crash in derivatives markets suggested that QVR was on the other side of some of the infamous hedge fund blowups of the time. Some of the esoteric derivatives weapons of mass destruction mentioned in those blowups include synthetic call options on equity index variance swaps (via spreads between capped and uncapped variance), corridor variance swap spreads between equity indices in different regions, geometric equity index dispersion baskets, and call options on the CBOE VIX Index. Eifert returned to Odd Lots to discuss the aftermath of the blowup of exotic structured derivatives risk in March 2020 . He also was interviewed by MRA's Dean Curnutt on the destruction of tail risk selling strategies among hedge funds and pension funds in March 2020 on Alpha Exchange .

Thomson Reuters noted that QVR also added 7.57% in April 2020, as "Hedged positions in dividend futures helped as did option positions which benefited from the volatile move lower in oil prices". Dividend futures are arcane derivatives products that large investment banks use to hedge the dividend risk embedded in the complex structured investment products they issue. Bloomberg and WSJ reported that large French banks BNP Paribas, Societe Generale and Natixis lost billions of dollars on their dividend exposure in March 2020 Bloomberg reported in July that QVR generated large gains by taking the other side of the forced hedging by the French bank exotic desks

Commentary on the retail trading boom of 2020-21

Eifert has frequently publicly discussed the large rise in options and derivatives trading by individual investors and its implications. He was interviewed on Bloomberg's Odd Lots podcast in September 2020, explaining the rise of aggressive financial speculation in derivatives by the Reddit Wallstreet Bets online investing community and by large institutions like Masa Son's Softbank. He returned to Odd Lots shortly after the short squeezes in Gamestop and AMC in January 2021, discussing the mechanics of short-term meme stock call option buying by Wallstreet Bets traders . He explains that some of the sophisticated, aggressive traders within Wallstreet Bets placed smart trades that worked extremely well , but that the broader me-too theme of aggressive retail speculation in derivatives primarily benefits Wall Street banks and hedge funds

References

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