Interview: Atsuko Tsuchiya on volatility and market conditions for L/S funds

Atsuko Tsuchiya is the Founder and CEO of Atom Capital Management in Tokyo. Japanese equities have been her focus since starting her career at Kleinwort Benson in 1995. At Atom, she manages and advises on Japanese equity long/short strategies. She started her own firm in 2008 after having gotten a solid foundation in finance and investments through jobs at firms such as Citadel, Sparx, Gartmore and Merrill Lynch. The Hedge Funds Club’s Stefan Nilsson had a brief chat with Atsuko about her stock market book, Atom’s investment strategy and the investment outlook in Japan.

In 2017, you published your “Understanding the Stock Market” book in Japanese and now it has been published in a Taiwanese edition as well. Why did you choose to write a book?

I was approached by a publisher in Japan as few experienced fund managers write about how to understand the markets. They wanted this book to be different from typical “how-to” books.

When you, as an experienced hedge fund manager, write about stock market investments in a book that, one can assume, is read by many inexperienced retail investors, do you consider the different risk appetites and understanding of risk when you write?

I think retail investors should understand and manage risk as professional investors like us. So, my comments reflect my view in the book.

Now that you have received success with your book in several editions, do you have any plans for writing more books?


You have now run your own firm, Atom Capital Management, for 14 years. Previously you have worked for major financial institutions and major hedge funds. What made you launch your own firm and has the journey so far been as expected?

I started my own firm since I believe I can provide a better service to investors that we want to service rather than working in large hedge funds.

You have focused most of your career on Japanese equity long/short strategies. What sets Atom apart from other Japanese hedge funds?

One is performance – we have an annualised return of about 18% with a Sharpe ratio of over 1.8. These figures are on a gross basis. Our portfolio construction consists of macro, micro and technical analysis. We tend to be concentrated with about 30 names in the portfolio. We take directional positions depending on our market view.

Has the Covid pandemic impacted how you run your firm and investment strategy in the past couple of years?

The pandemic has not impacted our investment style. As we calculate the fair value of stocks we invest in, we do not buy stocks over their fair value.

After many years of Abenomics, new Prime Minister Kishida seems to take a slightly different approach. From your perspective as a market observer and participant, what will be the opportunities in Japanese equities in the near future?

I think that going forward, there will be better market conditions for long/short funds than for long-only funds. It is not that we have a negative view on the Kishida cabinet. But from a global macro view, the market should be volatile during the shift from monetary easing to tapering and then to rate hikes.