- Alithion Capital Management Pte. Ltd.
Prior to co-founding Alithion Capital Management in 2007, Mr. Yaku was Head Trader and later General Manager of the Equity Department at Mizuho Securities, where he played a leadership role in establishing both the foundation of the equity foundation and profit expansion. Prior to Mizuho, Mr. Yaku held a leadership role at Japanese Stock Index Option trading group of Kyokuto Securities, where he had extensive derivatives theory and market wealth experience. Before Kyokuto, Mr. Yaku joined SBC Securities (now UBS Securities) and became the first Japanese derivatives trader. Prior to SBC, Mr. Yaku joined Kleinwort Benson. Mr. Yaku began his career at Nomura Securities. Mr. Yaku holds a Bachelors of Science from Seikei University.?
- The target universe is the top 500 market cap companies.
- We target convergence against stock with soaring volatility caused by irrational investment behavior from market players. Subsequently, we determine whether the position can cope with the total market volatility surge.
- Under normal conditions, we hold a portfolio of 70 to 110 stocks in a long/short strategy, as well as index futures/options.
- In a panic, the irrational investment behavior of market players becomes prominently apparent.
- The strong trend induced by such behaviors should be recognized as a profit-making opportunity.
- The target universe is the top 250 market cap companies.
- In the chart pattern, we identify “panic signs” based on analysis from past price fluctuation patterns.
- These price fluctuation patterns, together with various published information and data analysis, determine our decision whether to trade.
Our philosophy, which assumes that the pricing of various products in the market is the result of the investment activity of all kinds of participants, is to constantly watch for irrational movements in the fluctuations of such prices, and thereby discover revenue opportunities. It is indeed important to consider individual product fundamentals, their fair value, and their growth potential, but we are careful not to make investments with just blind faith in such factors. We are continuing with an investment policy of making many diversified investments in investment opportunities which we think are highly promising, while placing heavy weight on precise transactions with a short-term span. With this investment philosophy in mind, we intend to continue working hard in order to stably deliver an absolute return to our clients, irrespective of the up-and-down swings of the market.
My view is that the Japanese market is a very attractive market which, even globally, boasts a wide variety of outstanding participants, and exhibits fluidity. As an attractive merit, I would cite the fact that the costs involved in participating in a wealth of investment opportunities, that is, execution costs, lending stock costs, and the like, are low compared to other major markets.
I was attracted by the securities and finance world. I initially worked in retail sales for Nomura, and after that I was in management for a European corporation, and then worked in sales for about four years. During that time, I watched closely how the derivative product market was being organized in the Japanese market, and developed a very strong personal interest in working in the area of derivative trading. After that, I had an opportunity to join a new joint venture, dealing in derivatives, with UBS O’Connor, which was started at that time by the Union Bank of Switzerland (UBS), and there I was able to work in the trading division. At the time, I had an American mentor based in Chicago, with whom I was fortunate enough to study derivative product pricing, which was new back then, and also trading techniques and risk management methods. In the course of these studies, gradually the position was entrusted to me . At the time, in the `90s, the Japanese market went through many precipitous declines and rapid rises in an environment of weak market prices that was rare, even from a worldwide perspective. During this time, I was able to master the techniques of position risk hedging, and I think this helped me a lot later when I was managing various products in the stock trading division at Mizuho Securities.
I think it would be very rewarding to be able to introduce both Japanese and foreign clients to the investment opportunities and advantages available in the Japanese market, appealing to them with our company’s investment management techniques and track record.
There is a very interesting historical book called “Risk,” written by Peter Bernstein, which describes the process by which mankind, afflicted since before the current historical era by fluctuations in all kinds of things, developed the concept of probability, based on how they handled risk.
Every morning, I read the Nikkei Shimbun, and check the main headlines of other major national dailies. I am also continually monitoring the news that comes in from information vendors like Bloomberg and Quick and others.
That’s all the questions we have. Thank you very much for your cooperation.
Managing Director, Investment and Research
This article originally appeared on May 13, 2011. Any views presented in this article are as of such date and are subject to change.
This article and the information provided therein are not a recommendation to purchase or sell any security, nor are they intended to constitute the marketing of, or a solicitation for investment in, any investment product.
Alithion Capital is a Singapore-based investment manager founded in 2007 by Akira Yaku and Kentaro Ishizaki. Previously, the founders worked as proprietary traders at SBC (UBS) and Mizuho, respectively. In the beginning, Alithion managed a single managed account for Marubeni Corporation, one of the largest Japanese trading companies listed on the Tokyo Stock Exchange. Subsequently, on July 1, 2010, Alithion launched a new commingled fund and Marubeni shifted JPY \2 billion from its managed account, which had \3 billion, as a seed investor. The investment strategy of the new fund is the same as Marubeni’s managed account. Marubeni is one of the major shareholders of the firm.
The two portfolio managers have together over 35 years of extensive experience in trading Japanese equities and listed derivatives, primarily through proprietary trading desks of various sell-side firms. The fund aims to preserve capital and deliver returns of 10-15% annually with a target risk of 8-10% regardless of market directions.
Strategy of Akira Yaku
Concept:Capturing Volatility Change
First, we capture the phenomena of both volatility change on individual stocks and whole market rapid volatility change. Second, we transform the occurring changes into a profit-making opportunity.
Strategy of Kentaro Ishizaki
Concept:Panic Creates Trend
December 15, 2011
by Investment in Japan