Shout It Out Loud

Hedge fund industry interviews


In addition to our daily news feed, Hedge Funds Club’s Shout it out loud publishes interviews with interesting hedge fund managers and other senior industry figures that have something to say.

Interview: Pauline Chrystal – portfolio manager and pastry chef

Pauline Chrystal

Pauline Chrystal

In Australia, HFC’s Stefan Nilsson stumbled upon a portfolio manager who is also a pastry chef. Stefan couldn’t resist having a chat with Pauline Chrystal, portfolio manager at Kapstream Capital in Sydney, about her somewhat unusual parallel career in investment management and French pastry.


How did you in the middle of a successful career in finance and investments decide to become a pastry chef and launch your French pastry business by Pauline?

 I had worked in finance in France, Hong Kong and Singapore for close to nine years, going through the global financial crisis and very unstable markets, both financial and job markets, with rounds of cost-cutting and headcount reductions making headlines too often. At that time, my husband who is from Sydney wanted to relocate from Singapore to Australia and I saw it as a good opportunity to take a career break.


You have a CFA and an MSc from HEC School of Management, but also a certificate in patisserie from the Le Cordon Bleu Australia-Sydney. Are official qualifications as important in the pastry world as they are in the world of finance?

In any field, I believe experience and hard work always shine through. However, a qualification is a good way to gain credibility when you get started in a field.


Your firm By Pauline specialises in modern and delicate French pastries, breaking away from the traditional sponge and buttercream cakes. Are you on a mission to abolish sponge and buttercream cakes?

Not abolish but give another more modern option, which caters beautifully to current trends from dietary requirements to social media.


How creative are you when it comes to creating pastry? Do you stick to the French traditions or are you adding some Aussie flair to your offering?

 I go with new techniques but try to use local ingredients to the extent possible


From a time-perspective, how do you juggle the two different roles?

I’ve put By Pauline on hold for now. The business was positioned as an artisan handmade pastry catering business. In order to be able to pursue it, I needed to give it full attention, as well as pouring in a significant financial and time investment into hiring and training staff as well as a custom-fitted commercial kitchen. Therefore, I have scaled pastry down to a hobby and am fully focusing back on my PM role.


Are you as passionate about finance as you are about pastry?

Both are fulfilling from a different perspective. Finance definitely has less room for creativity but is very intellectually stimulating. Pastry involves hard labour but the end result is more personally rewarding than seeing one of the companies I cover release solid earnings!

(Aug 2019)

Interview: Grace Reyes, President of The Association of Asian American Investment Managers

Grace Reyes of AAAIM

Grace Reyes of AAAIM

HFC’s Stefan Nilsson had a chat with Grace Reyes, the ebullient head of The Association of Asian American Investment Managers (AAAIM), about the importance of diversity, social media and networking.


Tell us about The Association of Asian American Investment Managers (AAAIM) and its mission.

AAAIM is a non-profit organisation promoting ethnic and gender diversity within the investment industry. An official partner to the largest US public pension plans’ emerging manager, diversity and inclusion efforts, AAAIM’s alliance of prominent, successful Asian American leaders includes an expansive network of seasoned and rising investment managers that handle over one trillion in assets under management. AAAIM’s network provides a forum for professionals in the industry to meet, network and create business opportunities. This network continues to grow as AAAIM further engages more people and raises awareness of the organisation and the importance of their mission internationally.


You have a background in alternative investments and finance. How did you end up taking a role leading an industry association?

Prior to AAAIM, I spent time as the Head of Investor Relations & Fundraising at The Reliant Group, a real estate private equity firm with US$2bn in assets under management. I also worked on the corporate and business development team at Switchfly, a travel-tech firm, reporting to the executive suite. What was consistent however across all of my roles was the value of the close rapport I have formed with an array of industry leaders and prominent investors. When the opportunity to lead AAAIM appeared, I realised how valuable those relationships could be to this kind of organisation, as we grow AAAIM’s reach, value and awareness. Being able to share AAAIM’s mission with some of the industry’s best-known investors has been important to our growth as an organisation. I love that I’m able to pull on an important skill set of mine to fuel AAAIM’s future while promoting a mission of gender and ethnic diversity – one that I could not be prouder to represent!


When it comes to diversity and inclusion, do you see any dangers that some firms and people are just talking about it to look good rather than actually trying to build organisations that will benefit from proper diversity?

It’s easy to distinguish the organisations that are truly implementing diversity – those are the organisations that are championing the cause through action and not just furthering a message of diversity. I think it’s an important reminder that leadership take an active role in incorporating the change they are seeking through their own actions.


You are frequently socialising at industry events and you are also very active with social media. Is it part of your strategy to get AAAIM noticed or is it just the way you are?

I am social by nature! On the side, I’m also the Founder and Co-Host of goodtimesSF, San Francisco’s largest investment networking happy hour. I absolutely love meeting, networking and getting to know diverse individuals across our field. I also believe that being vocal about what we do at AAAIM is critical to our success. It’s important that people know who we are and what we represent. LinkedIn has been a natural venue to spread AAAIM’s message further through my own activity on this channel. It has been a great tool to reach new and greater audiences.


You founded investment-industry drinking club goodtimesSF a decade ago. What made you take that initiative?

As the head of fundraising for a private equity group, I was always out networking and wanted to find a more efficient way to connect with industry leaders and investors without having to go out every night. I decided to host happy hour events to bring people together and called it goodtimesSF because I think networking should be something fun! The group took off and grew to become the largest investment happy hour in San Francisco. Co-hosting these events connected me to some amazing individuals that have been pivotal to my career.


If you hadn’t worked in the investment industry, what would you have been doing as a career?

I grew up from humble beginnings and remember watching “Pretty Woman” in my youth. I was fascinated with Richard Gere’s career. It was my first exposure to how private equity works and from that point, I knew from this young age that I wanted to work in finance! This makes it hard to think of any other career path. But as I have been travelling all over the world, I wouldn’t mind being a professional jet-setter – is there such a role that exists?

(Aug 2019)

Interview: Daniel Rootes of Spark Plus on bringing Australian companies to Asian investors



Daniel Rootes

Daniel Rootes


HFC’s Stefan Nilsson caught up with Spark Plus’ Daniel Rootes in Australia ahead of the first Sydney Hedge Funds Club event which will take place on 10th September. Spark Plus provides listed companies access to accredited investors across the Asia Pacific region.


Spark Plus opened its first Australian office last year. How is it going so far?

It has been great. We have been very busy marketing the services to local corporates. We are based in Nedlands, Perth. We share an office with JP Equity and also have Tim Young who represents us out of Melbourne for East Coast exposure.


Have you seen good uptake on your service of bringing listed Australian companies to meet with hedge funds and other investors in Asia?

The Australian office has been looking to take quality companies to Asia to ensure investors that there is plenty of upside if they do choose to invest. To date, I have worked with approximately 12 corporates and the second half of the year looks promising as well.


Are you also looking at bringing non-Australian corporates to meet funds and investors in Australia?

This is something we can do if they are looking to list on the ASX. This would be through the assistance of JP Equity Partners.


Your Australian office is in Perth which is relatively close to your headquarters in Singapore. However, it is rather far away from Sydney and Melbourne. Is that an issue or is it easy to cover all of Australia from your current location? 

We have Tim Young based in Melbourne with 20 years’ experience in institutional sales in Hong Kong. I am also originally from Country NSW and lived in Sydney for eight years, so I get to Sydney every, or every second, month. It’s not really an issue as the ASX community is quite small and there is always a range of events in which we can attend to catch up with corporates.


Have you been focused on specific sectors or have you seen companies from many different industries doing non-deal investor roadshows into Asia?

I have focused on particular themes to suit investor demand but at the same time working with a diverse range of clients. Themes include healthcare medical technology, financial technology, gold, salt and potash and waste-water management. We certainly do not want to be seen promoting three similar stocks at any given time as investment results differ. However, Spark Plus do run sector-focused investor days in both Singapore and Hong Kong which receive big traction.


What has been the biggest challenge with launching Spark Plus in Australia?

I guess the biggest challenge is educating companies on the types of investors in the Spark Plus network. The biggest point of difference is that we profile the investors to ensure companies they are speaking with the right people for potential investment. At times companies expect investment straight away which may not be the case. But if we can market the company to family offices and hedge funds and the company delivers on their goals and objectives, they have eyeballs on the company and could well see sizeable investments on the market.


Spark Plus is one of the event sponsors of the first-ever Sydney Hedge Funds Club event which will take place on 10th September. What’s brewing in the Australian hedge fund industry?

Good question. I think with the XJO (ASX 200) having recently hit all-time highs, the Australian hedge funds are keeping a close eye on the trade war outcomes. I will certainly be looking to chat with some of the funds around the gold sector as we are seeing record gold prices as well.

For more information on Spark Plus, please visit:

(Aug 2019)

Interview: Roeland Pot, Managing Director, Flow Traders Hong Kong

Roeland Pot

Roeland Pot

The Hedge Funds Club had a chat with Roeland Pot, Managing Director of Flow Traders in Hong Kong about the derivatives markets, changing regulations and new business opportunities. In partnership with Eurex.


How has the MSCI derivatives market (transition from swaps to futures) changed in recent years and what is your outlook for the near future? Are there any growth drivers?

Increased regulatory scrutiny over recent years has led to larger capital constraints for investors as well as an increased need for transparency. This has resulted in a significantly larger uptake of regulated, listed and centrally cleared instruments and thus caused investors to move away from swaps and into futures. Flow Traders expects these trends to continue the following years. With regards to the MSCI derivatives market specifically, we’ve seen a major increase in open interest and turnover both off-screen as well as on-screen, leading to tighter bid-offer spreads and therefore reducing costs for investors significantly.


How is Flow Traders poised to capture this growth?

As a technology company operating in financial markets, we use our proprietary technology platform to provide liquidity in thousands of regulated, listed instruments and are therefore well positioned to capture expected future growth. We also provide liquidity to institutional counterparties off-exchange across the globe, such as pricing blocks in MSCI futures. Market participants benefit from higher execution quality and lower overall trading costs, while the markets benefit from greater efficiency and more transparency.


Will listed MSCI Futures become even more relevant for the buy side due to the next chapter of Uncleared Margin Requirements (UMR) regulations coming September 2019?

This indeed is to be expected. In response to the global financial crisis of 2008-2009, the G20 agreed to a financial regulatory reform agenda covering the over-the-counter derivatives markets and market participants. Among these reforms were recommendations for the implementation of margin requirements for non-centrally cleared derivatives. The final phases of UMR will occur on September 2019 and 2020, when a large number of additional counterparties will be in scope for posting initial margins on their non-centrally cleared OTC derivative positions. As of that moment, initial margins on centrally cleared derivatives, such as MSCI futures, will be significantly lower vs non-centrally cleared OTC derivative positions. These regulations are therefore meant to incentivise investors to further move away from OTC derivatives and into centrally cleared instruments, such as MSCI Futures.


What are, in your opinion, the main strengths of the Eurex MSCI derivatives offering?

MSCI indices are some of the world’s most widely tracked benchmarks, with more than US$12 trillion linked to them. Eurex offers a comprehensive suite of futures; 117 MSCI futures are available, covering Emerging Markets (EM) and Developed Markets (DM) in different index types (NTR, GTR and price indexes) and different currencies (EUR, USD, GBP, JPY), which are all tradeable for over 20 hours a day. This large offering helps fund managers as well as other investors facilitating in- and outflows of funds, hedge existing equity exposure and enhance portfolio performance. Flow Traders is the leading liquidity provider for Eurex in market making the full suite of products on screen as well as directly to counterparties, by providing competitive quotes on blocks upon request. For more information on Flow Traders and Institutional Trading please refer to our website:

(July 2019)

Interview: Gavin White, CEO, Invast Global / “We are committed to contributing to the growth of the hedge fund industry”


Gavin White

Gavin White


HFC’s Stefan Nilsson decided to have a chat with Invast Global’s CEO Gavin White about Invast’s expanding multi-asset prime brokerage business.


Asia-Pacific is in your DNA: Invast Global is headquartered in Sydney, your parent company is headquartered in Tokyo and you have recently opened an office in Hong Kong. How important is Asia-Pacific to your business?

Yes – our parent company has been a licensed financial services firm for over 60 years in Japan, so we have a long-standing affinity with the Asia-Pacific region. Having said that, our reach is truly global and our revenues are generated broadly across the world. We expect the Asia-Pacific region to be a big driver of our growth over the next 3-5 years. Hong Kong and Singapore have long been jurisdictions with strong asset management industries. There is a distinct entrepreneurial streak inherent in the culture of residents of both cities. With regard to the hedge fund industry, this translates into a healthy start-up and emerging manager scene. We intend to continue making a big commitment to serve this segment.


Do you mainly target existing hedge funds looking to switch prime brokers or are you more focused on signing up brand new fund launches?

Traditionally we have focused on serving the needs of the start-up and small/emerging managers. These are managers who have had a difficult time meeting the demands of the big bank PBs with minimum commission hurdles, etc. The bank PBs are being deeply affected by tightening regulatory regimes, particularly the Basel and MiFID regimes, which look to be with us for the foreseeable future. We focus on the specific needs of this end of the industry and our flexibility and non-bank status allows us to be more innovative toward this segment than the bank PBs can be. It is a real privilege to step into this space as the big bank PBs depart. Without a strong start-up and emerging manager segment, the future of the asset management industry is at threat. After all, the start-ups and emerging managers are the industry heavyweights of the future. We like to think we are playing our part in promoting a healthy, sustainable industry by helping nurture the smaller end. Having said that, demand from medium to larger managers has surprised us. It shows that the big bank PBs are undergoing significant restructuring programs, which is having the effect of ratcheting higher the requirements managers need to meet before being accepted onto the big PB platforms.


What do you think makes Invast Global’s offering stand out in a crowded prime brokerage market?

This is quite simple – we’re “high-touch” in the aspects of our client’s business where they want us to be, and “low-touch” in the areas that everyone finds painful. We’ve worked incredibly hard to ensure that our documentation, onboarding, KYC and DD processes are as efficient and automated as possible. But if a client calls up our coverage team at any time of the day or night, that call gets answered immediately by someone knowledgeable and professional who will make sure the client gets what they want, quickly and without fuss. We are committed to contributing to the growth of the hedge fund industry by nurturing the smaller end of the spectrum. We offer very competitive fees, with no monthly minimum commissions – something that is appreciated by our smaller fund clients. We have a specialist team of prime services experts who support the multi-asset needs of our clients – there is no transferring between prime services teams who are segregated along asset class lines. Clients can trade a broad range of OTC instruments, as well as a global suite of exchange-traded instruments, all from the one account and one collateral wallet. Stock borrow is one of our strengths, due mainly to the fact that we enjoy equity PB relationships with two of the largest PBs on the street, complemented by strong borrow relationships with other players. Overall though, we get most feedback about the quality of our client service. Every client is crucially important to us and we treat them all accordingly. We thrive on coming up with simple solutions to our clients’ complex needs. Every client is different, and we aim to adjust our offering in response to the specific needs of each client.


In addition to your vast experience as a broker, you have also worked for a global macro hedge fund. How important do you think that experience is for you in order to better understand and serve your hedge fund clients in your current role?

Yes – I have an intimate understanding of what it takes to get a fund up and running. It is not easy – especially if you are small and have limited staff numbers. The assistance you receive from vendors and service providers is crucial – mainly because your own internal resources are generally stretched pretty thin. The unfortunate fact is that the end of the market that needs the bespoke, flexible support, is precisely the end of the market that the big PBs are pulling away from. Start-up and emerging managers are often caught in this trap. There is a palpable sense of relief amongst many of the clients we onboard, when they realise the quality and breadth of our offering – and particularly how we have streamlined the onboarding process and devote resources to take the workload off the client. Most of our clients had been expecting to migrate to a retail broker upon being offboarded by their bank PB. They are pleasantly surprised to find that there is an offering like ours which is world-class, institutional quality, but at a reasonable price point and all-encompassing for their needs. We collaborate directly with our clients’ administrators and custodians to ensure processes are completed with the minimum disruption to the manager themselves.


Have you seen any change in recent years regarding what hedge funds and other clients in the Asia-Pacific region demand from their prime brokers?

A strong theme has been a growing demand for outsourced execution, which we have been providing for clients on a 24-hour basis for a few years now. We have begun developing bespoke execution algorithms to really give clients “remote control” of their executions. This is backed up by a highly skilled manual execution team operating around the clock.


You are a founding sponsor of the Hedge Funds Club’s expansion into Australia this year. What’s brewing in the Australian hedge fund industry?

We are very excited that the Hedge Funds Club is coming to our home town. We have had a long association with the HFC events and it has been a very valuable relationship for us, in many ways.

There has been a lot of movement in the asset management space in Australia and we believe there is great potential for the industry to grow strongly as a centre providing world-class asset management with particular expertise in the Asia-Pacific, a part of the world experiencing continued strong economic and demographic growth. We want to help fund managers get established down here and assist them in showing the rest of the world the quality of Asia-Pac managers. Partnering with the Hedge Funds Club to generate interest in Asia-Pac managers seems like a great idea to us.

(June 2019)

Interview: Gerben Oldekamp of Circle Partners – a new arrival in Asia’s fund admin industry

Gerben Oldekamp of Circle Partners

Gerben Oldekamp of Circle Partners

HFC’s Stefan Nilsson caught up with Gerben Oldekamp of Circle Partners in Singapore to discuss the group’s fund administration offering and its growing client base in Asia.


As a global fund administrator – how important is Asia to your business?

Until a little over a year ago, we did not have a presence in Asia. We had offices in the US, the Caribbean and in Europe and always thought Asia would be a great next step. It took us a while to take the plunge but we don’t have any regrets that we finally did. We have experienced massive growth due to our strategic plan and timing to enter the market. Both the turmoil in the fund administration landscape as well as a large number of new initiatives, have contributed to this.


Do you mainly onboard existing funds that want a different fund administrator or emerging fund managers at the pre-launch stage?

Both. Although we onboard quite a few emerging managers, we have a very diversified client portfolio. Especially here in Asia, we have onboarded quite a few existing funds as it seems that all the changes have led to some of our competitors struggling to keep up service levels. In the space we are active in, mid-sized fund administrator with AUA over 10 billion, I believe we are one of the few, if not the only one, still independently standing and I believe we have profited from this.


You personally have a background as a lawyer. How helpful is that when you work on fund administration and fund structuring?

It has added a tremendous amount of value, especially when talking about fund structuring. I have for many years been involved in setting up funds and structures. Being a director of fund structures in Europe, this experience has taught me to be creative and has given me a good network of resources to consult when I don’t have the right answers, which prospective clients appreciate. I have furthermore been involved with Circle Partners for more than 10 years now and, because of this, have added knowledge and experience in accounting, investment strategies, etc. which is helpful too.


How have fund managers’ needs changed in recent times in your experience?

In my experience, regulation and enhanced compliance requirements have made it at times quite complicated and overwhelming to launch. More than before, we try to be transparent and complete in the advice we give on setting up. We also try to be realistic in terms of time to market. To answer your question, more than before, managers need to be guided and hands need to be held.


We have seen a lot of consolidation in fund administration in recent years. How can independent fund administrators compete with fund admins that are part of banks and other broader financial services groups?

I see it as a tremendous advantage that we remain independent. Senior leadership, including myself, are very much on top and very concerned with service levels while at the same time being competitive on price. With an organization of just over a hundred people, we are nimble, timely and highly responsive. I furthermore think it is an advantage to be service-provider agnostic. Our clients are free to use any broker/custodian, platform, etc. This independence has proven to be very effective.


You have two local offices here in Asia. Is it vital to have a regional presence in order to win business and serve your clients properly?

Absolutely. During the time we were only active in Europe and the US, we would occasionally win some Asian business. We, however, often received feedback that not being able to offer the same time zone reporting and not offering Mandarin speakers was a reason to choose another service provider. With our office in Singapore, we now offer the above and we could have never experienced the growth we have experienced without it. We will now place people in our Hong Kong office, which has always been more of a representative office, as we have noticed that in order to further grow in both Hong Kong and China this is necessary as people like to meet and call people locally.

(May 2019)

Interview: Omar Taheri of Spark Plus talks about Australian expansion

Omar Taheri

Omar Taheri


HFC’s Stefan Nilsson checked in with Omar Taheri in Singapore to talk about Spark Plus’s expansion into Australia. Spark Plus provides listed companies access to accredited investors across the Asia Pacific region.


Having already established yourself with operations in Singapore and Hong Kong, you recently opened an office in Perth, Australia. Was Australia the obvious next step for Spark Plus?

Given that most of our clients are ASX listed, we thought it was a good idea to have our operations and sales team built in Australia. One really has to be close to the capital markets and be on the ground to be able to grow one’s businesses. We knew that travelling back and forth was not sustainable in the long run so we hired Mr Daniel Rootes to head up our Perth operations and grow the business.


Is the new office focused on hosting roadshows and events in Australia or is it more focused on marketing your Asian capabilities to listed companies in Australia? Or both?

The current offering is to take Australian companies to connect them with Asian investors on a non-deal roadshow basis. However, we are thinking to expand the offering to also have Australia as a roadshow leg for non-Australian corporates.


Perth is a city known for companies in the mining, petroleum and agricultural services. Was this a major factor in the decision to locate your Australian office in Perth?

The main reason we chose Perth as our first office is due to the same time zone, proximity, and our client base. We have a lot of firms coming from Perth given that it only takes five hours to get up to Singapore which is nearly the same as flying from Perth to Sydney. We realised that Perth for its population had a lot of entrepreneurs and a broker network that is very supportive of taking companies up to Asia.


In Asia, you have recently been active in sectors such as natural resources and healthcare. What are the hot sectors for Spark Plus in 2019?

We are actively looking for industries that are disrupting the status quo. We are quite bullish on the e-sports segment. The interest coming from large brands, sponsorship, tournament prize pool and viewership in this space is getting us excited. There are only a few companies listed in this space currently so we are hoping this trend will change as the industry matures. I highly recommend your readers to check out an e-sports event to understand the magnitude of the industry and how some of the major stadiums in the world are now getting filled with a whole new sub-sector of fans and followers. The other sector that we are looking at is the aircraft leasing sector. We do tend to find that this industry has great potential and yield. We constantly see rise in passenger numbers and a rising middle class in Asia, so hence we realise that airlines will need to purchase more planes and lessors will benefit greatly from this.


Spark Plus is providing independent corporate access, something which was earlier done by banks and brokers. Do you see any potential in partnering with banks and brokers to provide your service or do you see Spark Plus continuing to operate independently?

Currently, we do work with niche brokers to give them access to our Asian investor base. However, the larger investment banks already have this space covered given that they have an office in all major financial cities. We have had plenty of success with brokers that don’t have a presence in Asia but are looking to get connected to our buyside. We are also actively signing MOUs with new partners in Japan, China and the UK, which will allow us to mutually benefit each other’s organisation.

(March 2019)

Interview: Mio Kato, founder of LightStream Research

Mio Kato

Mio Kato


LightStream Research was founded in 2017 with the goal of melding traditional research with alternative data and artificial intelligence to provide deeper insights into companies, industries and economic conditions. HFC’s Stefan Nilsson checked in with LightStream Research founder Mio Kato in Tokyo to find out more.


You launched LightStream Research in 2017. What led you to set up your own business?

I think it was mostly a desire to be able to focus my time on things which seemed useful and were simultaneously enjoyable to me. Equity analysis is simply something I enjoy doing and my education also heavily focused on mathematics, economics and econometrics, so the new big data and alternative data wave seemed like it was right up my alley. My time as part of company management at the firm Uzabase also made me realise that I like developing and training talented juniors. Lastly, I believe there is a significant advantage in being able to tap the lower wages and financial skills of labour on the Indian subcontinent but there is some rigidity of contract terms and high fixed costs for traditional KPOs. The confluence of these three factors made me believe that there was scope to develop a small team of talented juniors in Sri Lanka to emphasise data-driven research and flexibly provide investors with analytical help, both through standard research notes and bespoke research.


LightStream is part of a wider group of related companies that cooperate on different levels. What advantages does this set up give you over some of your competitors?

We partner with Nowcast under the umbrella of the Finatext group. Nowcast is Japan’s foremost alternative data provider and together with Sandalwood one of the few go-to companies for alternative data in Asia. We sit in the same office as Nowcast and collaborate with them extensively so we have access to a variety of credit card, point-of-sales and point card data. Naturally, this gives us some unique insights about various consumer product and ecommerce trends which are important to investors, but the longer-term picture is really about combining the skills of equity analysts and data scientists to convert very interesting data into accurate alert mechanisms to highlight investment ideas and also help build real conviction. To this end, we started an initiative to have all our equity analysts trained in Python programming, not just for the purpose of web scraping and data crunching but also to try and understand the way our Nowcast colleagues come at a problem. That deepening of collaboration will be a key determinant of generating the most actionable and high conviction insights in my opinion. We also publish our research on the Smartkarma platform. While we have no capital ties with them, we know the founders well and have a strong regard for the direction they are trying to push investment research in. It is early days for these online research portals, but there are a number of extremely experienced and capable analysts on the platform whose expertise we can tap. We are all about collaboration and trying to understand as many different perspectives on a potential investment as possible so we are very focused on trying to generate conviction on investment ideas by passing them through multiple filters – alternative data, traditional fundamental analysis, the perspective of industry experts outside of the investment world.


Your business and your research analysts are split between Tokyo and Sri Lanka. What was the thinking behind this set-up?

Mainly cost and the ability to provide an attractive opportunity to talent in Sri Lanka which is interested in cutting-edge analysis. Many KPOs focus on the cost advantage of analysts in Sri Lanka or India, but from my perspective what is more important is the ability to select the very cream of the crop when you don’t have to stress over budget. Conceptually, rather than trying to hire good analysts for a fraction of the cost, we want to hire the very best analysts in Sri Lanka for what is by Tokyo standards an extremely reasonable cost, but quite generous pay by Sri Lankan standards. We believe this better maximises the cost/benefit ratio. Also, I am half Japanese and half Sri Lankan and I grew up in Sri Lanka so I have an interest in trying to provide talented Sri Lankans with similar opportunities to what I was luckily afforded in my career. The cost advantage does, however, have important implications for the scope of what you are able to do. For example, with our Nowcast collaboration, developing entirely new methods of analysis and combining data analysis with the understanding of company business models and operating leverage is time-consuming. It would not be easy to make the necessary investments for this process if you were to hire only Japanese analysts, but by creating mixed teams it is much easier to obtain the manpower while still ensuring an understanding of the local dynamics.


You have a focus on Asian research rather than global. What made you decide on a regional focus?

Well, my own experience is in Japan where I have been analysing stocks since 2004. I also see a lot of positive developments in the Japanese market and among Japanese businesses so given the gradual migration of analyst talent over the last decade plus I do not consider this a bad time to be focusing on Japan. For Asia more broadly, we largely focus on three areas: 1) industrials, where China is often the marginal demand driver and where Japanese companies are particularly strong, 2) tech where Asia is often a key source of demand and very dominant in the supply chain, and 3) consumer products and retail, mainly focused on Japan where we most heavily utilise data from Nowcast. Since a lot of incremental global growth comes from Asia and we believe that Japan’s companies are not just healthier balance sheet-wise but also increasingly successful at expanding in Asia, and profitably no less, we believe that the key swing factors which drive performance will be frequently located in Asia.


Data and artificial intelligence are all the rage now. How are the data revolution and changes in how data is collected, analysed and used impacting your business?

It certainly feels like the future. On a personal basis, I think that the increasing abundance of data as people start to understand its true value could eventually lead to a greater emphasis on long-term success and strategy as alpha becomes harder to generate purely from data sets, therefore we are not by any means de-emphasising the importance of company strategy and qualitative analysis. With that said, in the medium term, we believe data analytics could become a very strong generator of alpha. In particular, we believe effective forms of data cleansing, which Nowcast is expert in, and generating high signal-to-noise ratios will be key. With that said, data quality is an issue throughout the industry and making effective use of a lot of the data coming through is not easy. At present data collection and tagging is not done well by all generators of data and improving this will be a process. Once that can be done it is a matter of integrating the much more granular and high-frequency data into financial models to parse the impact on company earnings. We are also quite fond of very traditional numerical analysis such as correlation analysis and doing specific factor analysis of company earnings. It is simple, but often effective and now we have even more data to play with. Manipulating and combining data in appropriate ways to generate investment insights also requires a certain amount of understanding of finance and equity analysis which many data scientists lack. Thus, we believe collaboration is necessary and easier said than done unless priorities are appropriately aligned. Given that the alternative data industry is just starting to come into its own, best practices have yet to be established. Hopefully, LightStream and Nowcast can combine our expertise to do that.


You have worked with analysis and portfolio management in the Tokyo offices of a couple of international alternative investment funds in the past. How does this hands-on experience help you in working with fund managers as clients now?

I think the biggest advantage is understanding what they want, what they value and how they think. I prefer to think of LightStream as an outsourced buy-side analyst shop rather than a sell-side research provider or even independent research provider. We want to generate ideas that generate good returns and we want to effectively identify risks to the trade and be very aware of the path risk for stock prices. I personally do not consider myself a particularly good or bad trader, but I consider it important to try and accurately frame the catalysts and risks of an investment case to make the life of someone who is a good trader as easy as possible. I consider the analyst side of the work to be my calling but portfolio construction and risk management is also a very interesting discipline and intellectual challenge. Being conversant in the latter I feel helps when articulating ideas to PMs and particularly so when you are talking to many PMs who could have very different trading strategies, risk tolerances and investment horizons. My own bent is to look for ideas which are structurally sound and likely to be attractive on the long side for 1-3 years, but within that time period desired sizing could change dramatically based on price performance and upcoming catalysts. On the short side, I find that effective time horizons tend to be shorter, perhaps 6-18 months. Of course, for alternative data driven ideas, trading periods could be much, much shorter depending on what the data is telling you.


When it comes to working with hedge funds and other alternative investment managers as clients, it is becoming more and more important to be able to offer a flexible and often customised service in order to win new clients and keep existing ones. How flexible is your offering?

I absolutely agree. Flexibility and adaptability are increasingly important given the changing landscape not just in the alternative investment management industry but in almost every industry globally. So much is changing that the ability to deploy resources flexibly and have access to a diverse range of skill sets is truly key. We feel that we work very well with funds that require ad-hoc bespoke research as we do not demand specific time period commitments. Many outsourcing companies lock clients in to year-long contracts and bill monthly so even if you don’t have specific ideas that you want work done on you are still paying for that time. We are structured to steadily conduct our own analysis on companies and publish this through platforms such as Smartkarma as our “day job” but have the flexibility to respond to urgent or short-term requests, especially regarding data analysis. Ultimately our client relationships operate on a trust basis and “selling” is definitely not our speciality. We thus focus on trying to be high touch but low maintenance. When our clients have a need we are there and happy to customise our offering according to the exact scope they are looking for. When they don’t, we are quite happy to be out of sight and out of mind until they next need us.

(Dec 2018)

Interview: Lessons from an emerging manager

Anand Ramachandran

Anand Ramachandran

Himali Kothari, Founder of Aquamarine Value, is having a conversation with Anand Ramachandran, Partner and Fund Manager from River Valley Asset Management in Singapore. River Valley Asset Management started at U$10 million in 2014 and as of today, their AUM is U$60 million.


How did River Valley Asset Management get started?

The Partners in the firm have all worked in large global funds for over two decades and felt a need for stepping out of the straight-jackets which institutional asset management firms are finding themselves in. Large firms increasingly manage assets in specialised pools trying to outperform narrow market benchmarks while the return vs risk trade-off is left for the asset allocator or investor to manage. This creates dissonance as, during periods of market drawdowns, many investors feel disillusioned if their managers make a loss but claim they outperformed the benchmark. Secondly, active managers are finding that exchange-traded funds replicate narrow benchmarks cheaply, putting pressure on their revenues. In the past, as investors when we looked around the marketplace to invest our own capital, we could never find funds which could deliver the return expectations we were seeking. It was easy to find funds focused on themes such as a China fund or an India fund or a technology fund but very few mainstream funds focused on absolute return across sectors and themes. Most absolute return funds were in the hedge fund space employing complicated strategies but there were limited funds which employed a plain vanilla bottom-up long-term oriented multi-asset investment strategy. We felt that there was a need for delivering steady absolute returns, taking focus away from index-based benchmarks and delivering on a client’s absolute return expectations, ultimately the true benchmark. The result of this is River Valley Asset Management. The investment philosophy of the firm is a gist of how any professional investor will invest their own personal wealth, absolute return with low volatility. We believe in an active security selection process and are not straight-jacketed by the boundaries of benchmarks and asset classes. Our objective is not to beat benchmarks but to beat our clients’ return expectations without taking excessive risk. This approach takes away the complication of asset allocation and investment decision making which many investors want financial firms to take responsibility for.


What was your approach in raising seed money for the fund?

Our initial source of capital was friends and family as well as referrals from professionals who understood our philosophy and objective of delivering consistent absolute returns. In the initial days, we did not approach institutions because from past experiences, we knew that an established track record and an ability to demonstrate delivery of the investment process with proper systems and controls were key to attracting institutional money. As we started building a track record, we have seen increasing traction with institutions who are now doing due diligence on our firm.


Who were your initial hires? After your initial hires, did you wait until assets grew before expanding and, if so, what key positions were the hires?

We are a small firm with just five professionals. A lot of our activities were outsourced from day one and our belief is that as a firm we need to focus on the activity which adds the most value, i.e. investments. In the beginning, the firm started with two partners with the third partner joining subsequently. Other than investment professionals, from day one we had a dedicated person responsible for operations and compliance. Once we got our initial pool of capital, the first hire was an associate who could help us with middle office systems, financial modelling and record keeping. Our future hiring will be a function of our asset growth and we have a long-term plan whose objective is to grow headcount in line with asset growth mainly to ensure that client servicing is appropriate to the level of assets.


Was location a factor in your decision for the use of service providers for the fund?

Yes, location was a factor but, in addition to location, we focused on cost and the ability to provide adequate service for our clients. We were conscious that as a small boutique we may not get enough resource allocation by service providers and that was a key factor we took into consideration.


Did you outsource any middle, back-office processes from the beginning as you ramped up your AUM? If so, was the fund’s breakeven point a determinant or some other factor that was the reason to outsource?

We understand that scale matters in a lot of routine functions in investment management firms and so from day one, we outsourced the processes we thought could be done more efficiently by third-party providers. These include activities such as administration, trade settlement, accounting, technology support and compliance. We also understood that as a small boutique having well-recognised third parties supporting us on various functions would give investors added comfort in investing with the firm. The fund’s breakeven was definitely a factor under consideration and it was something we discussed with our outsourced providers, though that was not the primary consideration.


This is an excerpt from a 2017 Yale Endowment brochure: “Start-up and early-stage firms play a central role in the Endowment’s sourcing process. While many institutions seek established managers with long-standing audited track records, Yale keeps an open mind to nontraditional firms and looks beyond standard metrics to assess the integrity and skills of investment professionals. Yale pays particularly close attention to start-up and early-stage firms run by seasoned principals, believing that investment talent and entrepreneurial drive outweigh the risks of backing an unproven firm”.


Do you have any opinion on this from an emerging manager viewpoint and can you share your firm’s experience with allocators?

Our challenge with allocators is that while they may understand us and also like us during their due diligence, most of the investment allocation is very siloed and follows a cookie cutter allocation process, akin to what I call as “tick the box approach”. We struggle with this approach as what we are looking to deliver from our investment process straddles multi-asset class boundaries. Allocators typically classify managers by putting a manager into a particular asset class bucket and comparing funds with one another in the same bucket. They try to pick the best manager within a bucket while we would want to be picked across buckets on the pure merits of our risk-adjusted returns. A comment from one of the third-party agencies in Europe who has been tracking us for a long time highlights this dilemma: “What you guys do from a quality perspective is way above what I am used to seeing normally, but the challenge that I find is how to classify and present you and moreover your small size also does not help with that”.

(September 2018)

Interview: Omar Taheri of Spark Plus – roadshows with a spark

Omar team

HFC’s Stefan Nilsson checked in with Omar Taheri in Singapore to talk about his new business venture. Spark Plus provides listed companies with access to investors in the Asia-Pacific region.


You’ve honed your skills working for a couple of firms in the alternative investment industry in Singapore over a number of years. What made you recently start your own business?

I decided to start my own venture as I saw it much more rewarding from an intellectual standpoint than working for someone else. I decided to launch due to changes in regulatory environment namely MiFID2. I saw that the way corporate access is consumed was changing in Europe and was having spillover effects into Asia as well. I always had a passion for doing something on my own as I think running one’s own business is a fast-tracked MBA.


Your firm, Spark Plus, provides listed companies access to investors in the Asia-Pacific region through roadshows and events. Tell us about what you do and how you do it.

Essentially we choose small-mid cap companies that have very poor coverage and a very domestic shareholder register and bring these companies to Singapore and Hong Kong to do non-deal roadshows for them. We try and focus the investor base to family offices and funds that can take an exposure to a small cap company. The format that we generally do for a roadshow is to host a group luncheon with investors and a series of one-on-one meetings.


With regulatory changes happening globally and new restrictions impacting both brokers and their fund manager clients, you seem to have launched a very timely service. Do you think that this shift in how corporate access is done will continue to create opportunities for new entrants such as Spark Plus?

Most definitely. We are seeing other industry participants such as Smartkarma, WeConvene and other independent corporate access providers setting up. I do think that the traditional brokerage model will be broken into a variety of different pieces. Banks are starting to talk to us as well trying to understand our model. Currently, corporate access is a cost centre to a bank and what we are doing has made it into a profitable model, as we charge the corporations for taking care of all their roadshow activities. We will definitely see big buy-side firms building their own corporate access teams internally, independent corporate access/IR firms being set up and independent research firms continuing to set up. We realise that small- and mid-caps will be the ones that will get hurt the most in terms of coverage and these are the type of companies that need the most help in their investor outreach.

Omar Taheri

Omar Taheri


You seem to work with listed companies from a number of different industries and countries. What kind of firms, industries and opportunities are currently of interest to your fund managers and other investors that are part of your roadshows and events?

With our fund management community, we have had a lot of interest in certain sectors such as technology, healthcare and mining. Lately, we have received several requests to bring small- to mid-cap Japanese companies to Singapore and Hong Kong given the recent interest from activist funds. We also get constant requests for firms that have exposure to the electronic vehicle space. So, we have brought lithium, cobalt and graphene companies to our investor base. Most of the companies we roadshow are sub $500 million in market cap and are mainly from Australia. But we are starting to diversify our corporates and they are now coming from Germany, New Zealand, Japan and China.


You currently run events in Singapore and Hong Kong. Do you have plans to expand to more locations?

Yes. Currently, we conduct our non-deal roadshows in Singapore and Hong Kong. We are looking to do the same in Australia. The obvious expansion plans seem to be looking at the UK and Japan as the next few markets to look at.


If you had not worked in finance, what would you have been doing for a living?

I would most likely have taken a career in the casino industry. I had the opportunity to be a junket for a large casino chain but thought I didn’t want to disappoint my parents too much so decided to get into finance instead.

(June 2018)