Interview in OpalesqueTV: ” Melvyn Teo, Singapore Management University, Director BNP Paribas Hedge Fund Centre “

From the page on the OpalesqueTV youtube channel. This is video from 2010, but I thought it still carries relevance and long-term logic:

Opalesque’s first CAMPUS series features Melvyn Teo, Associate Professor of Finance at Singapore Management University. Teo is also Director of the BNP Paribas Hedge Fund Centre at the Singapore Management University.

In this Opalesque CAMPUS, Teo shares his findings that hedge funds charging lower than average performance fees tend to have a higher liquidity risk, which will translate into problems for investors, when they try to pull money out of the fund. One example of such a problem is the “return impact” of redemptions, when the return of the fund tends to fall in the next month.

Teo also gives specific recommendations what investors can do to better understand the liquidity risk a fund may carry.

 

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Merger Arbitrage: the Puzzle Capital example

Opalesque TV – Backstage

Set up as a family office by renowned French hedge fund entrepreneurs, Jean-Louis Juchault and David Obert, Puzzle Capital launched the Abrax Merger Arbitrage Fund in 2011. The fund is managed by Xavier Robinson, a merger arb manager with a strong pedigree and extensive experience of the strategy over the last 20 years. Since launch in May 2011, the fund has had no negative years and has generated double digit annualized net returns. As of the end of November 2015, the fund is up 21% YTD. The fund will look to soft close at $350/400m and to hard close at $500m.

Xavier says the single most important aspect of merger arb is to avoid “deal breaks”, as it takes ten successful investments to make up the performance loss caused by one deal break. Xavier and his team have invested in over 600 deals, but have only experienced one (!) deal break since launch. This stellar track record is in part a team effort and also a reflection of Xavier’s deep skills in prop trading, portfolio management, and investment banking.

In this Opalesque.TV BACKSTAGE video, hear Xavier and Jean-Louis speak about: The criteria employed by Abrax to filter deals with examples of deals that were correctly avoided How the failed merger between SHIRE and ABBVIE in Oct. 2014 is still impacting markets today, contributing to pricing inefficiencies in spreads and creating attractive opportunities A review of Puzzle’s best month and worst months The strategy outlook for merger arb

Puzzle Capital was founded by Jean-Louis Juchault and David Obert in 2009 as their family office and is regulated by the AMF in France. The two have worked together since 1989 (as MD & CEO, MD & CIO) at Barep Asset Management, a $5bn multi-strategy hedge fund. In 2001 they co-founded Systeia Capital Management which they sold in early 2008 to Credit Agricole.

Xavier Robinson has managed the Abrax fund since inception and has extensive experience of merger arbitrage investing. Xavier started his career in 1995 with BNP and then worked with Citigroup, Lehman and Dexia as a proprietary trader, fund manager and M&A banker. Xavier holds a Civil Engineering Degree from the Ecole Supérieure des Travaux Publics and an MSc in Finance from ESSEC (Paris).

Kaizen Asset Management – a South African multi-strategy fund.

I will post from time to time some videos by the Opalesque TV. These are excellent videos about the Asset & Fund Management industry; informative, instructive and insightful interviews with the leading and emerging managers and companies operating in the field.

Kaizen Asset Management runs a South African multi-strategy fund, investing in a diversified portfolio of securities, commodities, derivatives, gilts and cash. The core focus is long-short equities, with alternative assets classes used predominantly for hedging of risk and / or speculation.

Mark Witten, a CFA charterholder with an MBA and a BComm (Honours) cum laude, is Managing Director of Kaizen. In this Opalesque.TV BACKSTAGE video he explains the factors that are behind his fund’s strong outperformance of the benchmark : 214% net return since fund launch in July 2010 versus a gross gain of 93% of the JSE Top 40 Index. A “multi-modal” concentrated approach on top 20 ideas, together with specific portfolio and risk management frameworks, make Kaizen very unique. The fund uses three buckets – fundamental, trading & opportunities – and also develops “mini portfolios”. Hear Witten speak about:

– Idiosyncratic drivers of the South African Markets
– Macro as the first level of risk: Effective hedging with derivatives
– 2nd level of risk: Why it’s important to get the sectors right
– What should managers do in a market sell-off?
– What Mark Witten learned being a chef in his family’s restaurants
– Why a strong team needs debates more than a “yes”-culture
– Why South Africa’s drift to the left could be a boon for investors
– Outlook and macro themes: make sure to make good money on the short side

Mark O. Witten is a CFA charterholder with an MBA and a BComm (Honours) cum laude, in Law and Finance. He started my career at RMB Asset Management in 2000 before joining Goldman Sachs Asset Management in London. Witten also completed a masters credit at London School of Economics before backpacking through the USA, Fiji and Australia. After completing an MBA at UCT’s GSB, he moved to Johannesburg and joined Peregrine Capital as an analyst, covering the construction, energy and infrastructure sectors. He then re moving to Praesidium Capital in 2008 as a Fund Manager. Prior to setting up Kaizen, he spent a year with ex-Peregrine Capital director Shane Watkins in 2009 assisting him to set up Silk Road Fund Managers in Cape Town.