Hong Kong Hedge Funds Club
Evening Reception, 7 Nov 2019
Tokyo Hedge Funds Club
Year-End Reception, 2 Dec 2019
Tokyo Hedge Funds Club
Dialogue Luncheon, 3 Dec 2019
Singapore Hedge Funds Club
Evening Reception, 25 Mar 2020
Monthly Archives: March 2017
Katarina Royds, one of Ascalon Capital Managers’ responsible officers in Hong Kong, has been appointed a non-executive director of global equity manager Morphic Asset Management in Sydney. Prior to joining Ascalon in 2013, Royds worked in IR for Senrigan Capital Group. Previously she has worked at Cannizaro Capital, Banca Esperia, Credit Agricole and Aurum Funds.
Carret Private Investments, the Hong Kong-based Asian arm of Carret Asset Management, a multi-billion dollar investment manager in New York, has hired David Lam and Calvin Hsu. Lam joins Carret as chairman of the advisory board of its asset management subsidiary. He was most recently Head of North Asia for Coutts Private Bank and Head of Asia Pacific at GAM. Hsu joins Carret’s wealth management business, QL Asset Management, as a partner and Head of Greater China. He is a former regional head for Citi Wealth Advisors and has also worked at Salomon Smith Barney and Merrill Lynch Global Wealth Management. Carret continues to grow their Asian multi-family office business, particularly in response to the needs of the Greater China market.
Adrien Blavier has launched the Quadratus global macro strategy on the Gordian Capital platform in Singapore. Having earlier run the strategy as a managed account, the commingled fund was launched on 1st March. Quadratus manages a balanced portfolio, diversified globally across three asset classes – equities, fixed income and currencies. The strategy focuses on asset class allocation rather than single security selection and will typically hold 20-40 exchange-traded funds and certificates, offering cost-efficient exposure to multiple asset classes globally, together with index futures and listed options, providing hedging overlay opportunities. Prior to setting up Quadratus, Blavier most recently worked at Galena Asset Management, the private investment arm of the Trafigura Group. Earlier he was at Banco Santander, Barclays Capital and Bear Stearns. Quadratus has also hired Antsa Razafintsalama as a multi-asset quantitative analyst. She has previous experience from Credit Agricole, BNP Paribas and Natixis.
Three years ago, Mohammed Ali-Reda founded Darkhorse Capital in Hong Kong to manage his own bottom-up emerging Asia and Middle East and North Africa equity long/short strategy. HFC’s Stefan Nilsson decided to have a chat with him about this journey so far.
You manage an equity long/short investment strategy focused on Asia as well as the Middle East and North Africa. What can you tell us about it?
Our strategy focuses on identifying quality companies that are run by honest and capable management who value shareholder creation. We look to capitalise on discrepancies between perceived value and underlying fundamental value of a company by adopting a rigorous and disciplined bottom-up research process. Our focus is on protecting capital while maintaining a sustainable long-term return profile. The portfolio is concentrated and will typically hold around 15 positions and currently has an estimated return on invested capital of 40%. In addition, virtually all my personal net worth is invested in the fund and I view all my investors as true partners in the fund.
What’s your edge? What sets you and your fund apart from the pack?
We focus on a business’ long term prospects, concentrate our holdings and focus on high-quality companies and management teams. This approach means we are able to delve deeper into a company versus a fund that has a shorter holding period. In essence we are looking to maximise the return on time invested for each position that we own and our target holding period is five years. Our investable universe is focused on companies between $500m and $10bn in market cap, with a preference towards ~$1bn range where there is little or no analyst coverage. This allows for us to really conduct differentiated primary research and unique view on the stock. We spend a lot of time on the ground talking to companies, suppliers, industry experts, regulators, other investors, etc. to help form that view – as an example I took over 40 flights last year. We are extremely focused in various sectors such as consumer, specialised manufacturing and specialised financial companies and our focus on the industry value chain provides a better understanding of the industry and competitive dynamics. I’ve spent a decade investing in Asia and most of my career looking at consumer companies. When you look at the world through the lens of trade and business as opposed to what the MSCI and other indexes outline, you find that the Asian and Middle East regions are very interconnected and show signs of further integration. In addition, the development of the capital markets and certain industries are following similar paths as they move from frontier to emerging to developed markets. We believe that ignoring benchmarks while focusing and analyzing companies using this approach provides us with a differentiated view and edge.
What can you tell us about your career prior to launching Darkhorse in 2014?
Prior to Darkhorse I was managing money for Asiya Investments in Hong Kong as Head of Consumer for the group, where I ran various portfolios that consistently generated alpha. I had joined the firm in early 2007 as the third member of the investment team and helped build out the firm. During that time the Kuwait government wanted to provide a way for the public to invest in Asia’s future, instead of opening another office for the sovereign wealth fund, Kuwait Investment Authority, in China. So the KIA and a few other institutions along with the public capitalised the firm. That’s how I got started and focused my career on Asia. Before that I was managing propriety capital for a large bank in Kuwait where we had a global mandate. Over the years I have also been actively involved with the CFA Society. I was a board member and treasurer of the Kuwait chapter.
You have launched your fund on the OPIM platform. Why did you choose to work with OPIM?
I found the OPIM platform was more focused on making sure all the middle and back office functions were taken care of by capable team members and systems. This allows me to focus on the portfolio and investing. The onboarding process was simple and having other mangers around also makes setting up the business part of the fund easier as you can talk to them about any questions, etc. Recently they have been helping a lot more on capital introduction and getting us in front of investors. I also like the people I work with, which is a big plus.
Why did you launch the fund with Hong Kong as a base?
Hong Kong geographically is situated well within Asia with a best-in-class airport infrastructure. Most cities are within a three-hour flight and a flight to Dubai is now around six-seven hours, so traveling is easier than if I lived in another city. The regulatory landscape in Hong Kong is very efficient and recognised globally, which is very important at a time when regulation is becoming more stringent. I also love the food and culture in Asia so I enjoy living here.
If you hadn’t been a fund manager, what would you have been doing?
Growing up I had started a few small businesses, the earliest already in middle school, so I always thought I would be an entrepreneur. I looked up to many successful entrepreneurs and read all their biographies. The notion of running my own business was very appealing to me. In a way I consider running a fund as an entrepreneurial venture within the financial services industry. On top of that, I get to be a part owner in many great companies through our investments as opposed to managing only one which can be a lot more interesting.