Big-Data Shop Reaching Out to US Investors
The creator of a big-data program that correctly predicted recent election upsets in the U.S. and U.K. is marketing an investment vehicle based on the technology.
HTL Capital, a Paris investment shop that has been running money for a few separate accounts since 2013, is now offering its strategy to a wider audience, with a focus on attracting U.S. investors. In addition to separate accounts, HTL plans to make the strategy available via a Luxembourg-domiciled UCITS fund beginning next month.
HTL is led by Thanh-Long Huynh, who also runs QuantCube Technology, a Paris company that supplies big-data analysis to corporate clients, government agencies and investment managers. QuantCube’s proprietary code sifts reams of “alternative” data including port traffic, meteorological statistics and social media in an effort to glean sales trends, weather patterns or public opinion. The technology allowed QuantCube to forecast President Trump’s victory a week before the election and predict last year’s Brexit vote in the U.K. a month in advance.
HTL applies QuantCube’s techniques to manage a systematic portfolio of the most liquid U.S. stocks, sector-focused exchange-traded funds and financial futures. The manager selects investments based on a combination of investor sentiment drawn from social media and blogs and macroeconomic trends gleaned from a variety of unstructured data. One way it measures inflation, for example, is a daily sampling of 5 million consumer products sold in the U.S., France, Germany and China.
HTL currently runs $15 million in three separate accounts that were showing a four-year annualized return of 13.3% as of May 31, with an impressive Sharpe ratio of 1.98. That trounces the performance of the HFRI Equity Hedge (Total) Index, which shows a 1.4% annualized return and 0.15 Sharp ratio for the same period.
While HTL has no dedicated marketing staff, the firm began reaching out to prospective investors in the U.S. a couple of months ago. The campaign included an appearance on June 14 at a quantitative-investing conference in New York sponsored by Battlefin.
Until now, HTL has used little leverage, resulting in annualized volatility of just 6.5%. For U.S. investors, it’s pitching a more-leveraged version of the strategy, with targeted volatility of 10-12% and annualized returns of 20-26%. The firm already has received a commitment from one U.S. investor and has fielded strong interest from others. HTL might launch a commingled fund for U.S. backers down the road.
Meanwhile, it has begun soliciting capital for the planned UCITS fund from investors in Europe, the Middle East and Asia. The offering, AlphaNow Long/Short Equity Fund, is expected to launch with €25 million to €50 million (up to $56 million).
As part of its marketing effort, HTL is offering both separate-account holders and UCITS investors discounted fees equal to 0.5% of assets and 10% of profits. At some point, the management fee will jump to 1.5%, while the performance fee will increase to 20%.
Before founding QuantCube and HTL, Huynh was a quant trader at John Locke Investments. His resume also includes stints as a risk manager at BPCE, a senior trader at Credit Agricole and head of quantitative research at Lake Partners.
QuantCube recently lined up €5 million to €7 million of venture-capital funding from French institutions. The firm, whose staff currently numbers 28, plans to hire about 20 more staffers by yearend.