The Best in Hedge Funds
2016’s Alternative Investment Top Twenty-Five – Japan
First established in April 2005, Stats Investment Management Co., Ltd. is a hedge fund manager based in Japan specialising in managing Japanese equity long/short strategies. The flagship investment vehicle of Stats is the Ginga Service Sector (GSS) Fund, which is a Cayman unit trust first established in June 2006. The strategy itself largely concentrates on the information technology (IT) and service sectors as sources of alpha. In addition, it also focuses on medium and small size stocks, which are not widely covered by analysts so that original research can generate alpha unexploited by the market.
Our investment philosophy is based on the conviction, companies that are not widely covered by analysts provide greater opportunities for generating alpha through proprietary research. Concentrating on sectors and companies with experience and knowledge is essential in understanding the businesses and products of your invested companies. These sectors are one of the few areas that have the dynamism to change its business and pursue growth opportunities.
Corporate research is the backbone of Stats’ investment decisions. Indeed, the fund managers’ company visits are extensive and rigorous, each fund manager visits 400 companies per year, and as a team the total will be more than 1000 companies.
Since many IT companies that Stats invests in operate in Tokyo, our office location provides us with an advantage. In order to make our long/short strategy successful, we believe that the skills to manage risk both at an individual stock and portfolio level are extremely important. For this purpose, we limit our individual stock exposure to maximum 5% (under normal circumstances 3%).
We also employ a paring strategy to avoid excessive tilts in sectors or investment themes. For this reason, we adopt a proprietary sector allocation to capture the true natures of the businesses of our invested companies.
Stats’ investment management is supported by members with long experience and deep insights. CIO Toru Hashizume is one of Stat’s founding members. He started his career as a sell side analyst with one of the major research institutes in Japan, specialising in the IT and service sectors for more than eight years. Soon after, he moved to one of the largest mutual fund companies in Japan and managed its flagship long only Japanese equity fund with $3 billion assets for more than seven years.
He joined Stats in 2006 and started the long short strategy with innovatively new risk management. Working with the CIO is the fund manager Yhu Kuni, who has worked with Toru for more than 10 years since the inception of the GSS Fund.
The combination of our solid investment philosophy and experienced staff has produced an extremely good performance over the past 10 years. With no single negative year, GSS Fund’s flagship Yen has recorded an annualised return of 13.92% with an annualised risk of 8.71%.
This return itself, along with the longevity of our track record, makes Stats stand out above competition. This achievement was highly recognised by various awards in 2016. Currently Stats manages near $250 million in assets under the GSS strategy, and its client base is spread across various regions and various investor types globally.
2016 like any other year has been a challenging period for hedge fund managers and the Brexit vote will be remembered as a historic event with an unprecedented magnitude. Based on the data from our prime broker, Japanese equity long/short strategies managed by Asian managers returned, 3.42% on average, while our GSS Fund returned 1.74%. This is further proof that GSS strategy risk is well managed and has the capability to overcome even the most difficult market environment.
We expect the market to be volatile with a low trading volume, which is a challenging environment for our GSS strategy. However, as Stats has performed so successfully in the past, we will continue with our efforts to generate superior returns even in difficult market conditions.
Heading forward to the remainder of 2016 and beyond, Stats will continue to exploit additional fund raising channels, such as a vehicle to accept onshore U.S investors. In addition, we are exploiting various means to enhance our European channels. We are highly grateful to the investors who have invested with us up to date and we hope that our new initiatives will open the gate to investors who had interest in us previously but could not invest in GSS due to various limitations
Company: Stats Investment Management Co., Ltd.
Name: Masahiko Iwai
Web Address: www.stats.co.jp
Address: COI Hirakawa-Cho Bldg. 7F, 1-7-20 Hirakawa-Cho,
Chiyoda-Ku, Tokyo 102-0093 Japan
Telephone: 81 3 6658 4361