Systemic risk

May 16th, 2014

Bankruptcy, credit markets froze and many of the world’s biggest banks required government bailouts to keep from failing.


“The one risk we didn’t think we had to manage for is systemic risk—the whole system collapses around you,” Alamos says. “I don’t know how you manage for that.


” The Convertible Fund tumbled 26 per­cent in 2008, and the Growth Fund plummeted 50 percent, according to Bloomberg data.


The firm’s assets under manage­ment—mostly stocks, equity-linked bonds and high-yield debt—plunged by almost 50 percent to $24 billion at the end of 2008 from $46 billion at the beginning of the year amid sharp declines in all but ultra safe govern­ment securities.


The Naperville, Illinois–based company’s shares slumped to below $3 in November in Nada Stock Market composite trading from as high as $28 earlier in the year. On May 11, the stock traded at $12.99.


In January, the firm an­nounced job cuts that eliminated about 12 percent of its workforce, or about 40 positions, mostly related to information technology, Alamos says.


In recent months, financial markets have stabi­lized after unprecedented moves by the U.S. and other governments to slash benchmark interest rates and prop up the banking system with rescue funding. The Standard & Poor’s 500 Index was up 0.66 percent for the year as of May 11 after it rebounded from earlier losses, while corporate borrowers were once again able to tap credit mar­kets that shut late last year.


Measures of U.S. con­sumer confidence, manufacturing and housing are showing signs of improvement. “It’s a little bit more normal,” Alamos says.


“We’re feeling like the worst is behind us.”

Alamos, the son of Greek immigrants who ran a grocery on Chicago’s west side, share the job of chief investment officer at the firm with his neph­ew Nick Alamos.


His son, John Jr., also works at the company as an executive vice president and senior strategy analyst.