Bill Devereux — Research Analyst
I want to do things that are so interesting that I want to do them again. That’s why I work for Daruma. My favorite part about working here is figuring out the dynamics within a company and forecasting investor demand. I like to find new approaches and dig until we identify the true drivers of an investment.
I started my career in the grain room of the Chicago Board of Trade in 1995. It felt like working in the heart of capitalism — agricultural derivatives were my introduction to macroeconomics and investor psychology. Producers and consumers come to the CBOT to hedge their risks. I found myself always asking: “Why now?” Or, “Why was one futures contract chosen over an options contract?” There was an optimization decision being made, and I needed to understand what it was.
Later, I walked across the street to the Chicago Board Options Exchange where for the next six years, as a specialist on the CBOE, I did not eat lunch or use the restroom. As the lead trader in a pit of screaming market-makers, I guaranteed liquidity to any investor. Trades were filled via open outcry, so I never took a break and remembered every trade executed in my pit. Working for Goldman Sachs, I frequently held the largest positions in the market, so I had to know the stocks underlying the derivatives and anticipate flows of investor appetite. I loved it. And I wanted to do it over and over.
At night, I hung out in Crowley’s boat yard preparing to go around the world on a sailboat. First, I redesigned the boat’s systems so that it could be sailed fast by my wife and me rather than being raced by a crew of 13. Next, I installed or rebuilt everything — from sail handling to navigation to a desalination plant. It took two years, and I did all the work myself. If our systems failed, and I survived, I would have to fix the equipment. I had never sailed in the ocean prior to this expedition, but by knowing the boat’s mechanical systems and studying meteorology and navigation I tilted every risk I could in my favor and then took my chances. We completed our trip at 90% of maximum hull speed, learned a lot about solving seemingly insoluble problems and came back with a deep sense of self-reliance.
I returned to the U.S. and went to business school to renew my skill set with an increased focus on fundamental analysis. I graduated from the University of North Carolina at Chapel Hill with honors while spending as much time flying my Cessna as I did in class. The view from a low-flying aircraft is so different from what we see on the ground—parking lots, farms, shipping depots and factories, all with investment information, such as purchasing activity and production levels. Business school taught me to look at things from the perspective of industry. Piloting low-flying aircraft taught me that a different perspective can change conclusions, and that there are no second chances, so I better be careful.
After business school, I joined PEAK6, an equity and equity derivatives fund, where I was member of the firm’s skunkworks group. Our mandate was to find new investment ideas and new strategies — essentially to look at the same things everyone else was looking at, but then create a way to profitably invest where others could not. I left PEAK6 after four years and started Dames Point Partners, a capital markets and equity research consultancy serving institutional investors, regulators and attorneys. Dames Point’s clients were never one-shot deals. Every client came back for multiple engagements. When firms needed a fresh idea or a different perspective on pricing anomalies or fundamental analysis, I delivered.
Every day at Daruma, I draw from these experiences as a derivatives specialist, circumnavigator, pilot, investor and securities consultant. My research involves discovering what will prompt other investors to buy after Daruma does — is there an industry story or a change in the way others will view a company’s financials that is likely to tilt investor demand in our favor? I am very happy to be here, and I would do it again and again.