Hedge Fund Awards 2015

Hedge Fund Awards 2015 www.acquisition-intl.com 11 LR Global “Informational inefficiencies are abundant in frontier markets given their inherently nascent and opaque nature. Domestic and foreign in- vestors in these markets process information with local influences and biases that result in the mispricing of frontier market stocks relative to their long-term fair values. “LR Global believes that the informational inefficiencies present in frontier markets can be exploited through active portfolio manage- ment. LR Global’s approach is designed to minimise biases utilising a systematic approach to gathering and aggregating information. Utilising unbiased analysis that incorporates a consistent valuation discipline, enhanced by strict adherence to risk management, results in the construction of a diversified frontier markets portfolio built for long-term, risk-adjusted outperformance.” LR Global, with its extensive experience in frontier markets and its development of innovative tools, has engineered a strategy founded on risk management and rigorous analysis that reduces biases and increases the repeatability of long-term, risk-adjusted returns. “The LR Global Frontier Fund, Ltd. enables institutional investors to access a meticulously designed and tailored frontier markets strategy that underpins an institutional investment process that is unique to this opaque and diverse set of markets,” says St. Germain. LR Global’s competitive advantages come from its experience, man- power, investment process/systems and relationships, he says. “The experience from investing in frontier markets for 17 years helps us avoid many of the pitfalls of investing in this unique asset class as well as the needed insight in designing an investment process and infra- structure specifically tailored to these markets. LR Global’s investment process and systems, which utilise both fundamental and quantitative disciplines, are designed to reduce biases and increase the repeat- ability of long-term, risk-adjusted returns. LR Global leverages the manpower from its 17-person research team to systematically monitor and report key economic, political, market, and sector-specific news flow. This efficient aggregation of data allows us to overcome the informational challenges present in frontier markets.” Frontier Markets tend to have relationship-based cultures and dynamics that require going beyond data when evaluating investments. “In addi- tion to understanding the industry and competitive landscape for each potential investment, one needs to have a particularly thorough under- standing of political and ownership dynamics behind each company,” says St. Germain. “Relationships with informed people in each frontier market are crucial when trying to piece together and triangulate the full investment landscape for each stock in our portfolio. “Drawing on our experience, we have developed an extensive network of local relationships and an intimate understanding of each frontier market we invest in. These are crucial components of our investment process that give us an advantage that is nearly impossible to replicate.” Since LR Global opened its doors in 1997, much has changed in the industry, says St. Germain. “What was once an industry predomi- nantly comprised of family offices and high net worth individuals, has transformed into its own distinct asset class that is dominated by large institutional investors. “What has also changed is the regulation and attention which our indus- try is now accustomed to. The JOBS Act and AIFMD have ushered in a new dimension of regulation and compliance procedures which should improve the level of confidence in our industry. The downside for small, capacity constraint managers like ourselves is the significant costs that are associated with meeting the industry’s new requirements.” n

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