In an industry hampered by poor performance and its largest losses for seven years, one operation stands head and shoulders above the rest.
BFAM Partners, a firm that runs an Asian-focused multi-strategy fund, joined the Asian billion dollar club last year as their founder Benjamin Fuchs continued his unorthodox approach that very often sees him get a win where many of his close competitors are falling.
For example, Fuchs has a talent for knowing exactly when to bet on investors being overly bearish, such as the yuan devaluation of last year. When other hedge funds were chasing short term bets, Fuchs was gobbling up the faltering stocks of Kaisa Group Holdings Ltd. The bonds later doubled, allowing BFAM to profit massively due to overt fear in the world markets.
His recent activity involving Noble Group Ltd. where he sold credit default swaps highlighted his knack for identifying investor pessimism.
Fuchs has driven the fund to ten consecutive months of gains and increased their managed assets by a cool $700 million since July 2015.
In an interview Fuchs said “There are big results available in situations that may initially look like they are losing options for investors. Most of the time it all depends on what your starting price is and when you decide to go in. Timing is vital.
Although the fund is essentially private, inside sources have revealed that BFAM’s returns this year have exceeded 5 percent.
“He’s very ‘old school’ in the way he operates” said Derrick Noble Vice President of corporate trading at Fidea Group, who worked with Fuchs at Lehman Brothers when they were both proprietary traders. “He doesn’t overcomplicate his trade structures, he’s just very solid at identifying opportunities and moving in swiftly” he added.
Nearly a thousand hedge funds folded in 2015 in a year of unprecedented losses toward the end of the year. According to Eurekahedge Pte, an Asian based data supplier, BFAM tripled the industry average with regard to annual returns.
Bar Waiter
The Californian Fuchs, who moved to Japan at the age of 20 after graduating from Berkeley, was content in his youth finding employment as an English teacher and working part time in a karaoke bar. A fortunate set of circumstances involving a meeting on a bus in Tokyo led to new opportunities on the trading floor at the extinct banking giant Barings, boosting his career in the industry.
He is never more comfortable than when he is going against the establishment, and his offices are situated right next to a bustling food and animal market well outside of the central financial zone. “I’m as happy as a pig in the proverbial” Fuchs said in an interview last year. And who could doubt it, with his company now a model case in an industry where the titans of the sector continue to struggle.
