Monthly Archives: July 2014

Michael Garrow and Johannes Kaps have taken another big step by selling a stake in their business, HS Group, to TPG Capital. HS Group is focused on seeding new Asian hedge fund managers.

Stephen Fisher: the Fish Mix

Stephen Fisher, Chairman and CIO, First Degree  Global Asset Management


Three years ago Stephen “Fish” Fisher, aka DJ Dr Fish, left JP Morgan after a couple of decades at the firm to set up his own fund in Singapore. Fish is now the Chairman and CIO of First Degree Global Asset Management. HFC’s Stefan Nilsson decided that it was a good time to have a chat with Fish about running money, house music, shovelling snow, what gets him out of bed in the morning, aircraft leasing and fishing for absolute returns.


Tell us about your journey from Australia, via a distinguished international JP Morgan career to setting up your own fund in Singapore.

After finishing my undergrad in Sydney, I baulked at getting a job so I gained entrance to grad school in Rochester, New York. I turned up without an overcoat, which was a big mistake since Rochester is in the snowbelt. It was cold and I spent five winters shovelling snow. I promised myself that when I graduated I would live in the tropics. I started, dirt poor, in New York City working for JPMorgan Asset Management and they eventually gave me the opportunity to move to the tropics, i.e. Singapore! From day one at JPMAM I really wanted to re-engineer the investment process but it is difficult to change the course of a supertanker. A few years ago I opted to start my own fund in the tropics and shape an investment process that is exactly how I think money should be managed.


You have now run your own fund for three years. Please explain your investment strategy and investment process.

Around the same time as I started studying finance in Rochester, there was a realisation that asset markets were, in fact, predictable. This was cathartic since the prevailing belief had been that market prices were random walks, i.e. unpredictable.The interesting feature of this discovery was that forecast power is strongest at longer horizons. That means that short term market gyrations occurring on a daily, weekly or monthly basis are more like random noise which mask longer term cyclical patterns. Our process simply focuses on these longer term predictable regularities and ignores short term fads. We don’t pay much attention to the headlines in the Financial Times!


What differentiates you from other similar fund managers out there?

To be honest, I have not encountered a manager that does anything like what we do. Nor has anyone I speak to. We are a “macro” manager but we don’t pay attention to macroeconomic variables like GDP, etc. We focus on financial risk premia instead. We synchronise our strategy rebalancing to the longer forecast horizon, which means less trading and not reacting to short term noise. Most macro managers, on the other hand, equate active asset allocation to short term themes and run back to cash at the slightest hint of underperformance. We are systematic, disciplined and patient.


What is your approach to risk?

We deliberately focus on quality risk taking. As a macro fund, we are free to take risk across asset classes but we deliberately restrict ourselves to the fixed income beta markets. This is because the forecast power per unit risk is much, much higher in bond markets versus, say, equities or currencies. For instance, explained variance for bond beta can be over 50% versus 8% for equity beta using the same model specification. We rather take risk where our probability of success is greatest.In terms of risk management, we have built a quantitative framework that is consistent with the special features of a long-horizon investment process. We do not outsource risk management – and I cannot understand why anyone would do such a thing.


Tell us what you find the major differences are managing your own shop compared to what you did at JP Morgan.

As you get more senior in a big shop, your time becomes absorbed with administration, “resource planning” (i.e. bonus negotiations) and fighting fires. If I was able to spend half a day per week doing something creative I was lucky. Now I spend 100% of my time being creative and productive. Consensus decision making takes five minutes. It’s wonderful.


You have worked around the world – in Australia, in the US and throughout Asia. Why did you choose to base your business in Singapore?

When I first started working, I knew that Asia was going to grow and eventually dominate the investment markets, simply because there are three billion people getting rich out here. Singapore’s government knew that too, and they have expertly positioned the country to serve as one of the bankers for the region. Regulations and taxes are friendly to startups here. And, of course, Singapore is in the tropics so I don’t have to shovel snow!


You have recently joined an aircraft leasing company in a non-executive role. Are you taking your career to new heights?

It’s certainly not a career parachute, so the answer is yes! While I understand the physics of it all, I still cannot believe how a 500 tonne A380 manages to get off the ground. Similarly, in the aircraft leasing business, I am fascinated at how it is possible to buy an aircraft for $20m and immediately lease it out for $25m. Were this the bond market then buying a $20m bond would only fetch $20m on repo. When I was invited to join the Avation PLC board, I wanted to understand whether this is (i) an arbitrage or (ii) compensation for risk or (iii) something else, so I happily agreed. It’s a real, live research project!Most people in the aircraft leasing industry love flying machines, so they don’t come at the business from the finance perspective. Injecting a little bit of finance in with the choice of “metal” (that’s industry lingo for an airplane) should ultimately make money for investors.


Apart from running money, what gets you out of bed in the morning? What are your passions?

I cook, I drink wine and I mix my own music under the private label the Fish Mix by DJ Dr Fish. I first encountered house music in 1991 and I instantly realised that this was the future for music. I threw away my “indie cool” CD collection and embraced electronica and techno. I used to buy compilation albums but there were always three or four tracks I didn’t like, so now I listen to a few hundred samples, choose the best 10 or 15 and mix them together. Would you like a copy of my Christmas album? If I get my act together the cover will feature “Rudolph the Red-Nosed Fish”….


If you weren’t a fund manager, what would you do for a living?

It sounds weird, but all that I think about are numbers. I remember phone numbers and statistics. I count things and calculate probabilities. I can look at a dataset and estimate both its mean and standard deviation in my head in seconds with pretty good accuracy. I see patterns. 20 years ago this would have suited me to be a bookmaker, but in modern times I think I would chance my luck as a Big Data entrepreneur.

                                                                                                                             (Jul 2014)

Nomura veteran Takashi Futatsugi has left his product planning gig at Nomura Asset Management for a new role in asset management at The Nomura Trust and Banking Company.

Masashi Ichikawa has joined the Japanese hedge fund firm Grid Investments as an analyst covering Japanese listed companies. He was most recently at Asset Design, another Japanese hedge fund manager.

Ling Ling Tan has left the Investment Office of the National University of Singapore.

Wei Yeh Sun has left Greylock Capital Management (Asia). He joined the firm in 2008 from Bear Stearns.

Yewei You has left his gig as trader at Moon Capital in Singapore.

Chance Xie: alternative journeys

Chance Xie, Founder, Journeys by Chance

Chance Xie

Hong Kong-based hedge fund investor Chance Xie decided to follow her passion and launch Journeys by Chance, a high-end active lifestyle creator based in Hong Kong. HFC’s Stefan Nilsson decided to talk to his former JP Morgan colleague about her alternative journey from hedge funds to bespoke travel.


You’ve gone from consulting to alternative investments to running a bespoke, high-end travel business. Tell us about your journey.

I was working in Boston and Montreal as a consultant engaging in Bear Stearns and Lehman Brothers’ bankruptcy settlements. Then I decided to move to Hong Kong to be closer to home. I worked on the investment side for both Goldman Sachs and JP Morgan but spent most of my time at JP Morgan building up their Asia hedge fund offerings. Travel is my passion and I always knew I’d do something with it. But I got into this business much earlier than I would have thought.


How did your passion for world travel start?

I travelled a lot with my parents when I was a kid. They are both professionals and went to attend conferences all the time, so I tagged along. When I went to university in London, that’s when I really started travelling for leisure. My first trip was to Morocco, it was a mind-blowing experience and Morocco remains one of my favorite countries. I went to Morocco with only a picture brochure from the consulate where I got my visa. I didn’t book hotels, did no research. Now, thinking back it was crazy of me to just go there like that, but I had a wonderful time!


Why did you decide to launch a travel business?

I believe that with our time on earth, you need to see the world. As a perfectionist, I plan each of my personal holidays to become a journey of a life time. But I realise lots of my friends cannot do that. They either don’t know how to dive into a new destination or they don’t have the capacity to organise perfect logistics. So one day, I was asked “what is the legacy you want to leave in the world?” Immediately, the only answer I could think of is I want to help others to have a journey of a life time! I want to let them travel in a way that dazzles their eyes, enchant their mind and they will not come back the same, i.e. truly memorable, powerful and life-enriching holidays. So, I launched Journeys by Chance.


You call your business a “high-end, active lifestyle creator”. What sets your business apart from other similar travel-related businesses?

We are an aspirational brand that defines the way of travel and living. Travel represents a lifestyle. It must be exciting but also it must be comfortable, it is a vacation after all! So, we tailor-make a perfect combination of independence and handhold for each of our travellers. We only offer destinations where we have personally experienced and built strong relationships, so we can give first-hand insights and unique access to experiences hard to arrange. Think private visit to Vatican City, cooking lesson with a celebrity chef, visit artists at their home studio, etc. This business is about people to people connection and great logistics. Not everyone can offer that.


Who’s your typical customer and what kind of travel experiences are they typically after?

Our typical customers are successful and busy professionals and entrepreneurs. They are all very curious about the world and cutting-edge travel experiences. With their limited time, they demand the best and the most authentic experiences, from accommodation to activities.


What is the most challenging travel itinerary you have been asked to make happen?

We were given very short notice to plan a trip for a big family of 15 people to Europe. On a daily basis, the group were broken into two or three small groups and each have different activities, because grandparents want to do different things from the grandkids for example. And some of them are early risers and some want to sleep until they naturally wake up. So when we scheduled sightseeing helicopter flights, we chartered three helicopters and three flight time slots during the day, so they had the freedom to choose when to fly. This is the most complicated logistics we had to arrange so far, but we love challenges and we love to make everyone happy.


What’s your favourite mode of transportation when you are travelling the world?

I really like train journeys. It just feel more romantic and you can chat with lots of random people.


Where is your favourite place in the world?

It is so difficult to pick one, because each journey I took is a journey of a life time! If I have to pick one, I’d say Cuba. It is so different from the rest of the world.


Is there anywhere in the world that you want to visit but haven’t yet?

I still have not been to most parts of Africa. We are planning a research trip to Zimbabwe, Namibia, Kenya and Rwanda. We are looking forward to provide our travelers something different for Africa soon!


When it comes to exploring the world and the good life in general, do you have any hero you look up to?

Hmmm…not really…


The travel business has really evolved on many fronts over the past decade. Low-cost airlines have brought international travel to the masses while at the high-end of the market we have seen increased demand for bespoke travel services and unique travel experiences. How do you think the travel business will evolve from here?

I think the travel space will be more polarised. You will have the general public enjoying travel at cheaper rates thanks to the internet and then you will have the other end of customers focusing on unique experiences and services. It’s like in the world you will have Zara and Hermes, they are both good and people should try both.


You have experience from both Goldman Sachs and JP Morgan. Have you learnt anything in high finance that you have brought into your travel business?

Actually, running my travel business is exactly like running a hedge fund of funds. My clients used to give their money to me to invest, now they give me their most precious asset, time, to invest. For all the destinations we offer, we have a due diligence process as rigorous as putting a fund through an investment committee. Each destination has thousands of operators, but we only select a couple, the best to work with. We understand their company background, how they run their trips, their travel philosophy, their finances. We talk to their founders and owners and we do reference checks, and annual on sites. I use the same process at JP Morgan due diligence for our travel company, Journeys by Chance.

                                                                                                                                              (Jul 2014)


Boutique investment bank StormHarbour has agreed to buy a 49% stake in Japanese hedge fund manager Asuka Asset Management. As part of the deal Asuka’s founder, Mamoru Taniya, will become managing principal of StormHarbour and focus on running its new asset management business. 15-year old Asuka started out as the Japanese arm of Tudor Investment Corporation.