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January 1, 2002

She Got Trading Game

By Sanford Wexler

Many years before Susan Ware was making good trades, she was scoring aces on the tennis court. Ware, who is head trader at Dallas, Texas-based Westwood Management, was a top-ranked tennis pro when she was a teenager.

She finds that trading equities and playing tennis have a lot in common.

"Trading is like a sport," Ware said. "You have to be pretty competitive in getting executions."

Born and raised in New Orleans, Ware earned a B.S. in finance from Louisiana State University (LSU) in 1983. Owing to her tennis skills, she attended LSU on a full scholarship.

Her first job out of college was working in the public finance department at the regional brokerage firm, Eppler Guerin & Turner in Dallas. Three years later, in 1986, Ware joined Smith Barney's institutional sales and equity trading desk in Dallas as a trading assistant.

Switches Side

In 1992, she switched over to the buyside and became head trader at Fort Worth, Texas-based GSB Investment Management. Then in 2000, she joined Westwood Management as the firm's head trader.

Westwood was founded in 1983 by Susan M. Byrne, who was formerly an assistant treasurer at GAF Corporation, responsible for investing GAF's pension fund assets. In 1993, Westwood became a wholly-owned subsidiary of Southwest Securities Group (SWS).

While Westwood is a subsidiary of SWS, a Dallas-based holding company that is engaged in investment banking and securities brokerage, it functions as an independent investment manager.

The firm manages some $3 billion in assets, including $2.4 billion in equities. Its clients are a variety of institutions, including corporate pension funds, religious organizations, endowments and foundations.

Westwood is also the investment advisor to The Gabelli-Westwood Funds, a family of open-ended mutual funds.

Susan Ware heads up a desk that comprises three traders. Its trades are equally divided between listed and Nasdaq stocks. The desk makes about 30 to 40 trades each day and draws upon some 20 broker dealers.

Best Execution

To Ware, best execution comes first and foremost. "You have a fiduciary responsibility to your clients to get best execution," she said. "You tend to trade with the brokers you feel are giving you best execution."

Nasdaq and listed trading are becoming increasingly more efficient, Ware noted. She credits this transformation to reduced trading costs and the advent of electronic trading systems.

Although electronic trading is now commonplace, said Ware, old-fashioned voice communication is still the key to establishing rapport between buyside and sellside traders.

"I know there was a fear about liquidity problems as we went from trading in sixteenths and eighths to pennies," Ware said. Although critics of market fragmentation will disagree, Ware thinks the industry's "liquidity problems" have been mostly resolved.

"You are always going to have certain problems with certain stocks," she said. "But I think the market on the whole has become more efficient and trading costs have come down."

Over the past ten years, the speed of trading has increased exponentially. "The markets move a lot faster now," Ware said. "You have to be ready to move right away when the morning starts."

She added, "Investors are also more educated today [about the stock market]."

Caution Advised

In the same way that a tennis pro sizes up his or her opponent before hitting the court, Ware advises buyside traders to do the same.

"You should be very cautious and find out who your competition is before you commit your full order," she said.

For relaxation, the former tennis pro turned trader now finds the golf course a lot more challenging than the tennis court.

"I played tennis for so long it became too easy. Drop shot, there it is," she quipped. "I did all I could do in tennis. Now, golf is a pretty difficult sport."

And so is profitable trading, especially in this marketplace.