Capital
OCTOBER 2014 - The New Hedge Fund On The Block
Word Capital
MAC, 2012
I like the ongoing journey. I like how it’s changing all the time. I like the path that I’m on. I’m happy with where I’m at and I basically have my whole career to thank for that. - J.P. Auclair, Skier, R.I.P. Dear Colleagues, Philotimo Philotimo is considered to be the highest of all Greek virtues. In its simplest form, it means “doing good”, and it ensures your behavior will make you stand out from others. (Wikipedia) The Changing Of The Guard Every time I open up any financial news, there is a story about a several hundred million dollar hedge fund closing down, citing high overhead costs, inability to scale, and poor performance. From where I’m sitting, if you can’t figure out a way to achieve scale at $100 million AUM, something is wrong with the brand, or lack thereof. When I say “brand”, I am talking about how the founding team conveys its personality, story, and values through the business. This cannot be achieved through the hedge fund cookie cutter recipe of Color + Object + Capital (ex. Blues, Blacks, Stones, Rocks, Rivers, Mountains).
Branding is something that cannot be bought; a brand must be built, tested, challenged over time. Consider Word and our brand to be the exact opposite of the Color Object Capital approach. While we share a deep affinity for Mother Nature, we have chosen to build our brand around the simple concept that our word is our bond; when we say we are going to do something, we do it. In the world of financial services, there is dire shortage of this mentality. Hedge Fund Trends 1. Hedge fund assets are expected to reach USD 3 trillion by the end of 2014, with pace of industry growth to be maintained or accelerate through 2020. 2. Increasingly challenging regulatory requirements with regard to transparency, reporting, and operations force managers to adapt traditional business models and asset management platforms. 3. Technology and social media are becoming increasingly utilized for manager discovery, due diligence, and allocation decisions. Word Capital’s Value We have maintained monthly public correspondence through our newsletters, blogs, daily performance on Bloomberg and our own network. We have shared our story because we fundamentally believe that an asset management business should be transparent from the get-go; investors cannot know who we are without knowing where we’ve been. Our efforts to date have been focused internally on our operational infrastructure, and building our team. Reflecting, I confidently claim that Word Capital is the most efficient, lean and operationally sound hedge fund in the world; we offer the greatest value for future investors. We have built our brand, our technology, and our team from scratch with our own effort, empowering us infinitely over our competitors. No area of the business has not been deliberately explored and tested. In stark contrast to many of our predecessors and contemporaries, Word Capital has been and is very much operational with less than the typical level of USD 100-250 million, where “industry experts” claim a hedge fund can break even. We utilize open source technology and are building out tools on our own fully encrypted, secure network. Flagship Macro Strategy We are actively managing our Macro Fund, directed by Founder and CIO, Pedro Nieto. Nieto studied mechanical engineering and applied mathematics at the University of London and served as an officer in the Spanish Military before a fifteen year institutional career in fixed income and foreign exchange trading in London, Mexico, and New York. With a unique expertise within emerging markets, Nieto has fused his quantitative strategy with the most progressive trading platform, designed specifically to his taste, which utilizes exchange-traded futures contracts on currencies, interest rates, equity indices, and commodities to construct portfolio allocations cleaner and cheaper than the industry is used to.
Knowing the challenges that face emerging managers with less than two years of formal, audited track record, Word has aggressively tested Nieto’s strategy on new systems with principal capital. Based on the depth and liquidity of the macro space, the strategy behaves the same at all levels of AUM, different from alternatives like distressed, equity, real estate strategies. In the first 21 months of the Fund’s track record, Nieto has demonstrated NAV behavior on both the upside (geometric) and downside (linear, controlled) before preparing to accept institutional capital from a limited number of investors in 2015. Performance since inception remains positive, while the capital base has grown to include early, private investors. Team Word Capital Word Capital was founded by partners Pedro Nieto and Andy Culp in Summer 2012. Operations have grown and, thus, the team has expanded from two to four. Pedro Nieto, Partner and Chief Investment Officer Andy Culp, Partner and Chief Operations Officer Bill Ottman, Technology Taylor Humphrey, Investor Relations Looking Ahead The direction remains clear: continue to manage risk, grow assets, and show you as much of how we do it as possible. This is transparency. Fund performance details are available with the Bloomberg Ticker “WORDCAP US Equity” and also on our secure network, word.am/groups/ featured. If any of these words reach your soul, feel free to contact me anytime. Thank you for your support Philotimo. Word is bond,
Mark Andrew Culp Andy Culp Partner, Word Capital
Digitally signed by Mark Andrew Culp DN: cn=Mark Andrew Culp, o=Word Capital, ou, [email protected], c=US Date: 2014.10.31 11:53:19 -05'00'
Word Capital
MAC, 2012
I like the ongoing journey. I like how it’s changing all the time. I like the path that I’m on. I’m happy with where I’m at and I basically have my whole career to thank for that. - J.P. Auclair, Skier, R.I.P. Dear Colleagues, Philotimo Philotimo is considered to be the highest of all Greek virtues. In its simplest form, it means “doing good”, and it ensures your behavior will make you stand out from others. (Wikipedia) The Changing Of The Guard Every time I open up any financial news, there is a story about a several hundred million dollar hedge fund closing down, citing high overhead costs, inability to scale, and poor performance. From where I’m sitting, if you can’t figure out a way to achieve scale at $100 million AUM, something is wrong with the brand, or lack thereof. When I say “brand”, I am talking about how the founding team conveys its personality, story, and values through the business. This cannot be achieved through the hedge fund cookie cutter recipe of Color + Object + Capital (ex. Blues, Blacks, Stones, Rocks, Rivers, Mountains).
Branding is something that cannot be bought; a brand must be built, tested, challenged over time. Consider Word and our brand to be the exact opposite of the Color Object Capital approach. While we share a deep affinity for Mother Nature, we have chosen to build our brand around the simple concept that our word is our bond; when we say we are going to do something, we do it. In the world of financial services, there is dire shortage of this mentality. Hedge Fund Trends 1. Hedge fund assets are expected to reach USD 3 trillion by the end of 2014, with pace of industry growth to be maintained or accelerate through 2020. 2. Increasingly challenging regulatory requirements with regard to transparency, reporting, and operations force managers to adapt traditional business models and asset management platforms. 3. Technology and social media are becoming increasingly utilized for manager discovery, due diligence, and allocation decisions. Word Capital’s Value We have maintained monthly public correspondence through our newsletters, blogs, daily performance on Bloomberg and our own network. We have shared our story because we fundamentally believe that an asset management business should be transparent from the get-go; investors cannot know who we are without knowing where we’ve been. Our efforts to date have been focused internally on our operational infrastructure, and building our team. Reflecting, I confidently claim that Word Capital is the most efficient, lean and operationally sound hedge fund in the world; we offer the greatest value for future investors. We have built our brand, our technology, and our team from scratch with our own effort, empowering us infinitely over our competitors. No area of the business has not been deliberately explored and tested. In stark contrast to many of our predecessors and contemporaries, Word Capital has been and is very much operational with less than the typical level of USD 100-250 million, where “industry experts” claim a hedge fund can break even. We utilize open source technology and are building out tools on our own fully encrypted, secure network. Flagship Macro Strategy We are actively managing our Macro Fund, directed by Founder and CIO, Pedro Nieto. Nieto studied mechanical engineering and applied mathematics at the University of London and served as an officer in the Spanish Military before a fifteen year institutional career in fixed income and foreign exchange trading in London, Mexico, and New York. With a unique expertise within emerging markets, Nieto has fused his quantitative strategy with the most progressive trading platform, designed specifically to his taste, which utilizes exchange-traded futures contracts on currencies, interest rates, equity indices, and commodities to construct portfolio allocations cleaner and cheaper than the industry is used to.
Knowing the challenges that face emerging managers with less than two years of formal, audited track record, Word has aggressively tested Nieto’s strategy on new systems with principal capital. Based on the depth and liquidity of the macro space, the strategy behaves the same at all levels of AUM, different from alternatives like distressed, equity, real estate strategies. In the first 21 months of the Fund’s track record, Nieto has demonstrated NAV behavior on both the upside (geometric) and downside (linear, controlled) before preparing to accept institutional capital from a limited number of investors in 2015. Performance since inception remains positive, while the capital base has grown to include early, private investors. Team Word Capital Word Capital was founded by partners Pedro Nieto and Andy Culp in Summer 2012. Operations have grown and, thus, the team has expanded from two to four. Pedro Nieto, Partner and Chief Investment Officer Andy Culp, Partner and Chief Operations Officer Bill Ottman, Technology Taylor Humphrey, Investor Relations Looking Ahead The direction remains clear: continue to manage risk, grow assets, and show you as much of how we do it as possible. This is transparency. Fund performance details are available with the Bloomberg Ticker “WORDCAP US Equity” and also on our secure network, word.am/groups/ featured. If any of these words reach your soul, feel free to contact me anytime. Thank you for your support Philotimo. Word is bond,
Mark Andrew Culp Andy Culp Partner, Word Capital
Digitally signed by Mark Andrew Culp DN: cn=Mark Andrew Culp, o=Word Capital, ou, [email protected], c=US Date: 2014.10.31 11:53:19 -05'00'
