Platinum Capital Management Limited is a London-based team of investment and asset management professionals and has affiliate offices in UK, Switzerland, Hong Kong and Dubai.
Interview with Craig Reeves
- Who is Platinum Capital Management?
Platinum Capital Management was set up by myself and Peter Sprecher nearly six years ago. Peter, an experienced hedge fund investor and entrepreneur, and myself have known each other for many years. I was previously Head of Risk Management at Titan Capital Management Ltd, and a proprietary trader for its parent company Gaiacorp Trading and Peter was a prospective investor when I first met him. Over the years, our business relationship developed into a personal friendship. Six years ago I resigned from Titan to join UBS, but never actually joined! Instead, Peter persuaded me to form Platinum Capital Management. Our initial product, Equity Plus Fund of Fund was launched with 6-7 initial hedge fund investments. It now holds over 30 funds. We manage in excess of $300 million AUM in group assets spread over a variety of fund of funds and single manager products as well as insurance-linked wealth products.
- What are the main characteristics of your fund and how do you differentiate yourselves from your peers?
We judge each fund on the merits of the fund manager's ability. Looking at our various single manager and fund of fund products, there are a number of common threads.
We don't like leverage - we view it as a dangerous and much misunderstood tool. Neither do we like black box nor commodity strategies, although we are not adverse to them; it is just not the areas we have focused on.
We like a strong team, composed of four or more individuals with significant working history together. It's important that the team know each other's strengths/weaknesses and personal nuances and still like each other. From our perspective, it also offers good contingency liability should a cataclysmic event occur (e.g. Sep 01, Aug 98).
We like a lot of the managers' net worth to be invested in the vehicles. It's not unusual for our managers to have over $10 million invested in their own fund.
And finally we favour 'steady-eddy' funds over volatile gung-ho managers as capital preservation coupled with growth are key to us.
Describe the selection process of the underlying funds?
It's a 4-part process that ends with the decision of our investment committee. We look at over 800 funds a year, but only allocate to 3-4.
- Discovery: This is the physical process of discovering a manager and happens on an ongoing basis through word of mouth, email, prime brokers, third party marketers, websites etc.
- Quant Analysis: If we like a fund then we put the numbers through our proprietary systems to evaluate them. If the fund is still interesting and it would potentially add value to our existing portfolio then we make contact with the fund to obtain more information which we will analyse.
- Conference Call: If, after the two rounds of quant analysis, the fund still appeals we organise a conference call with our Risk Management Board plus Peter and myself. The call itself may take anything from half an hour to two hours depending on the fund.
- Site Visit: If the conference call went well we will conduct a site visit to get to know the team, risk processes, contingency liability, etc. If the visit was successful, we recommend the fund to our Investment Committee who will determine the initial allocation from our fund of funds product.
- What is the breakdown by sector/style/geography?
We don't allocate like that as we have a more macro vision.
- How long do you track a manager before you invest?
The track record is the initial door opener. It has to be good; it's a given. We usually like a four-year track record but the longer the track record the better. Our 4-step investment process is outlined above.
What information do you require from managers and how often?
We like weekly NAV estimates, full position disclosure (which we treat with complete confidence) and regular dialogues.
- What risk management processes do you employ?
Our selection process is fairly exhaustive (each year we analyse over 800 funds but only invest in 3-4) but we view it as only the beginning. Once a manager is selected, we stay in close touch. We constantly review the numbers, monitoring for statistically significant anomalies and style/strategy drift. We monitor and regularly meet the team. On a monthly basis, we filter the selected funds and decide on ongoing allocation to each underlying fund.
- How has the capital raising been for your products and do you have a 'typical' investor?
We have over $300 million AUM in group assets, and have had net cash inflow for the past 40-plus months. Our investor base is about two-third institutional with one-third coming from high-net-worths. Geographically, our capital has come from Europe, Middle East, Asia and South America primarily. We have affiliate offices in UK, Switzerland, Hong Kong and Dubai.
Do you run any other products?We run a variety of product ranges, spanning funds of funds to single manager funds, from institutional and retail investors. Our wealth management company (Platinum Wealth Management) also has a number of insurance-linked products, all of which allocate to hedge funds.
- Platinum Premier Fund
- Platinum Dynasty Fund
- Platinum Turnberry Fund
- Platinum All Weather Fund
- Platinum Washington Fund
- Platinum Equity Plus Fund
- Platinum Portfolio Fund
- Platinum Capital Protected Equity Plus Fund
- Platinum Capital Protected Income Plus Fund
Platinum Capital Management Limited
Tel: +44 20 7887 6110+44 20 7887 6110
Fax: +44 20 7403 5605