Nimrod offers investors a different way to invest
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Marc Gordon, the partner and co-founder of Nimrod Capital, answers questions from Tomas Hirst.Q: What was the thinking behind setting up Nimrod Capital?
A: We set up Nimrod just over a year ago after we left Close Fund Managers, which we had made into a successful business. We still had ambitions in the asset management industry, however, and we felt we could add value for clients.
Me and my co-partner [Richard Bolchover] are rather obsessed with portfolio construction. The old theory tended to involve putting all of your eggs in one basket and we were interested in doing things differently, to find new ways of investing people’s money.
In order to have a good investment strategy you need to have clarity so that you understand how you plan to meet your objectives.
Q: How have you gone about achieving these aims since the company was established?
A: We’ve launched two funds; Crystal Amber, an activist fund, and Altus Resource Capital. In both cases they are about capitalising on opportunities that present themselves in the market within a very specific remit.
The Crystal Amber fund raised £60m at launch and invests in companies that the managers see as undervalued by the market. This can be because they are unloved by investors because of their size, or that the process used to value the companies fails to understand the underlying business.
For the resources fund, the key factor has been a dislocation between gold spot prices and gold stocks. The share prices of gold companies have fallen sharply while the price of the commodity was rising and that’s obviously anomalous. It is managed by a team at Altus that has significant experience in the mining sector who can look for the best opportunities in the small and mid-cap sector.
Q: Some commentators have suggested that the asset management industry in Britain is already nearing saturation point in terms of the quantity of funds available. How does Nimrod Capital aim to stand out in the marketplace?
A: What differentiates Nimrod Capital from our competitors is that we are trained fund managers who have spent years working in the industry. Because of this we think about trading before we deal with selling, although we do have to market our products.
One of the biggest concerns I have is to find ways of achieving general capital growth as well as income. How you structure a portfolio and identifying what risks you are taking on in the process are, therefore, key issues.
Communication with clients is of course paramount. You have to be doing exactly what it says on the tin, but you also have to remind people that you’re doing it and how you’re doing it.
Q: What areas are showing promising signs or interesting opportunities at the moment and are there plans for further launches over the coming year?
A: Although we don’t have any imminent launches we’re always looking at new opportunities as they emerge. For instance, everyone is shying away from private equity at the moment. It’s difficult to get bank financing currently and many of these businesses have taken on a large amount of leverage and need to raise capital. Clearly, however, in this kind of market you have to be selective.
There are also opportunities in the hedge fund space which has been hit hard over the past year.
Q: How are you looking to grow the business and are there any key members of staff that you are planning to recruit?
A: As a business our rationale is to identify and provide interesting investment solutions. We’d also like to invite people who have good investment ideas to pitch them to us and set up their own business alongside us. The door is very much open to people in investment management and indeed elsewhere in the financial services industry.
We’re looking at people who know their particular industry very well but can also differentiate themselves from the pack. I’m a great believer in differentiation in our business. We’re not there to compete with the Fidelity’s and the Jupiter’s of this world but to provide interesting investment ideas for them to invest in.
Q: Have you been pleased by the performance of the funds that you have already launched?
A: It’s clear that we hope we can achieve good track records with the funds we’ve launched. We are probably the only people to have brought two funds to the market over the past 12 months.
The Crystal Amber fund is up almost 20% since launch and we believe it has performed very well.
The Altus Resource Capital fund only launched at the end of last month, so we have a bit of time yet before we get a full year’s track record.
Q: Do you think that investing in non-traditional asset classes will give the impression that Nimrod Capital is a niche boutique?
A: Just because they’re different doesn’t mean that these products are niche. By definition, if you’re investing in a particular asset class, like gold, then you’re operating in a niche market but it is one that people are comfortable investing in. If you think of the stuff we did at Close we found innovative strategies and brought them to market, such as the Close AllBlue fund.
I think the business relies on a combination of a strong, clear strategy and excellent personnel. But it is also about differentiating the asset classes we invest in outside of just equities and bonds.
Q: What has the feedback been like from investors?
A: The response in terms of getting a hearing has been very positive but raising money has been tough in the current environment. At times like these investors also tend to retreat into familiar asset classes, so the risk appetite comes down along with the amount of money being put into the market as a whole.
Despite this we raised £60m for the Crystal Amber fund last year, which we were pleased with, and Altus Resource Capital was £26m in size when it was listed on the Specialist Fund Market [of the London Stock Exchange] last month.
