Bayview to Absorb Alphex Invesment's $11 Million Fund as Takamatsu Joins

Date: Friday, May 14, 2010
Author: Bloomberg

Bayview Asset Management Co., a Tokyo-based investment boutique, will hire Alphex Investments Co. President Ichiro Takamatsu in July and fold some of the 1 billion yen ($10.8 million) fund he manages into its own.

Alphex, a Tokyo-based hedge-fund adviser, is halting operations in June after Takamatsu had “difficulties” managing both the operation and clients’ funds simultaneously, Bayview Chief Executive Officer Ken Yagi, 48, said in an interview yesterday. Alphex analysts Masamitsu Ohki and Sanae Saga will also join Bayview, Takamatsu said by phone.

Bayview, which Yagi formed in 1998, manages about 200 billion yen, about a third each in foreign exchange, U.S. and Japanese equities. The fund emphasizes individual company performance before considering any economic trends, a style known as “bottom-up.”

The move will let Takamatsu, 45, “remove his role in top management and allow him to just focus on managing his fund and be a stock brat,” Yagi said.

Bayview is creating a new fund to be managed by Takamatsu, starting with 1 billion yen, including funds folded in from Alphex, which may increase to as much as 30 billion yen, Yagi said, without giving a time frame.

‘Long-Short’ Fund

Takamatsu, who has managed Japanese mid- and small- capitalization stock funds, incorporates “bottom up” with a top-down view, Yagi said. At Alphex, Takamatsu managed a “long- short fund,” which bets both on rising prices for some stocks and on declines for others. The fund returned 10 percent in 2008 when the Topix plunged 42 percent amid the financial crisis, according to Bayview.

“I had three roles at Alphex, managing funds, managing the company and sales, which became very tough for me,” said Takamatsu today. “It’s better for me to focus on investing funds under Yagi’s management.”

Japanese hedge funds, the world’s worst performers last year, returned 6.7 percent in the first four months of 2010, the best year-to-April return in six years, according to Eurekahedge Pte.

The Eurekahedge Japan Hedge Fund Index, which tracks 91 funds, gained 2.5 percent last month, the Singapore-based firm said May 12 in a preliminary report on its Web site.

Japan-focused managers are making a comeback after their 6.9 percent return last year lagged behind the global average by about a third, according to Eurekahedge. The Japan index’s gain beat the Nikkei 225 Stock Average’s 4.8 percent advance in the four-month period.

Equities Appetite

“Over the past two or three years the appetite for Japanese equities has declined, especially from foreign institutional investors,” Takamatsu said. “Even though the performance is good, the risk of redemptions is getting higher.” The peak of Alphex’s assets was 8.6 billion yen in August 2009, while it was around 5 billion yen as of March 2010, he said.

Japanese companies that develop new technologies are good targets for investment, especially those that make batteries, electric vehicles, materials, agriculture and robots, Yagi said.

He said Bayview targets 450 billion yen in assets and expects to raise the proportion of Japanese stocks to 50 percent in the mid-term. He didn’t specify time frames. The company plans to increase the number of employees to 50 from 36 in the mid-term, and will hire new graduates for the first time from next year, Yagi said.

“We see that size as our limit,” he said. “If it’s bigger than 50, I don’t think we can share our philosophy.”