Hedge Funds Swap Strategy With Gamblers to Open Poker Main Event

Andrew Barber decided to change his career to finance from poker soon after April 15, 2011, when the FBI shut down the top U.S. online gambling websites on a day that has become known in wagering circles as Black Friday.

Barber, a 30-year-old Cornell University graduate who calls himself a “self-loathing” poker player, is finishing his master’s degree in economics at California State University, Sacramento, opting not to follow several of his peers to other countries to continue gambling.

“If I did that, then I would have been acknowledging I was a poker player,” Barber said in an interview yesterday at the inaugural MacroSports conference in Las Vegas.

The meeting, which focused on macroeconomics and poker analytics, was held at the Bellagio hotel, around the corner from the 62-event World Series of Poker at the Rio All-Suite Hotel & Casino. The final tournament of the World Series, the $10,000 buy-in No-Limit Texas Hold’em World Championship -- also known as the main event -- finishes first-round action today and will play down to nine by July 15 before deciding a winner in November.

Topics discussed at the conference included the art of reading behaviors, or tells, in poker players and corporate executives; world debt and currencies; and strategy for how to play the main event.

“This is probably the first early Sunday morning conference in the history of Las Vegas,” said Nate Silver, the author, New York Times blogger and former poker pro, whose discussion topics included the outlook for the next election cycle.

MacroSports Start

Reid Walker, who helped start the Dallas-based hedge fund Walker Smith Capital LP 16 years ago and closed it nine months ago with almost $600 million in assets, co-founded MacroSports.

“There’s always been this hidden nexus of what drives good poker players and good investors,” Walker said in an interview. “I hope it will be a fun conference over time if it germinates like we hope it does.”

Walker added that the event might be moved to May next year, when Las Vegas temperatures aren’t over 100 degrees Fahrenheit (38 degrees Celsius).

Tim McKillican, a 31-year-old from Toronto who’s been playing online for eight years, signed up for MacroSports after taking finance tutoring from Brandon Adams, the poker professional and author who has taught economics at Harvard University. Adams is also a MacroSports co-founder.

McKillican invested his poker earnings with the Madison Group, a Kitchener-Waterloo, Ontario-based real estate partnership that’s turned about 400 distressed residential apartments into rental units.

‘Who Knows?’

“There’s a lot of long-term value created with the real estate stuff, so it sets up a good picture,” McKillican said. “With poker, who knows what’s going to happen next year?”

Chris Moneymaker’s main-event victory a decade ago helped start a poker boom. Adams said it’s now become “nearly impossible to become a pro poker player, especially in the United States,” citing the absence of a legal online structure, the amount casinos take for hosting cash games and tournaments, and the cost of living while trying to play enough hours or events to become profitable.

The liveliest conversation of the conference came during a session with 23-year-old Canadian poker pro Mike McDonald, who invests in other players’ tournaments, called staking. Of the $62 million spent in buy-ins for last year’s main event, about 20 percent to 25 percent came from people taking stakes in others, according to McDonald. Up to 70 percent is staked in some high-roller events, he said.

Market Stakes

With the belief that the marketplace for investing in poker players was inefficient, McDonald last month began looking into selling long and short stakes in other players. He quickly found out that making such a market was illegal.

“It’s probably one of the least efficient markets I’ve seen and for one that’s this large, it seemed it would be beneficial to have it correct itself,” McDonald said in an interview. “If I could aid in correcting it in the worst case and financially do well in the best case, it seemed kind of win-win.”

McDonald, who said such an improved marketplace is likely in the future, was eliminated from the main event in Day 1 play over the weekend, as was David Einhorn, president of New York-based Greenlight Capital. Bill Perkins, the founder of Houston-based Skylar Capital Management who won $2 million in a charity tournament at this year’s WSOP, was also eliminated in the opening round.

Chip Leaders

The main event’s “Day 1” is spread from July 6-8, with each entrant playing on one of the three days. Through the first two flights of the opening round, the chip leaders are Clement Tripodi of Montesson, France, with 207,050 chips, and Evan Panesis of Overland Park, Kansas, with 190,975. The third and final section of Day 1 play is today.

Barber said he plans to continue playing poker while moving into finance, because the human capital he’s invested in learning the sport is “probably worth half a million.” The knowledge he’s gained includes how to accept parting with $10,000, Barber said.

“Poker players get really good over time of having a disconnect when it comes to money and the decisions they’re making, and that’s the thing that traders and poker players have most in common,” Barber said. “You can’t be emotionally connected in what you’re doing or you’re lost.”

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