Wednesday 21 November 2018

Interview of the Week: Real life 'JR' is a mover and shaker in hedge fund world

Sean Ewing, Absolute Capital Management chief

SEEING DOUBLE: Sean Ewing has doubled assets under management each year through organic growth and the inflow of new investors. LIAM MULCAHY
SEEING DOUBLE: Sean Ewing has doubled assets under management each year through organic growth and the inflow of new investors. LIAM MULCAHY

LETTERKENNY may well boast of being one of Europe's fastest growing towns, but it hardly springs to mind as the place to foster a career in asset management.

But Sean Ewing may be the exception that proves the rule. It was while working in the sprawling North West town that he cut his investment teeth, developing an interest in asset management and the special grá he has for alternative fund management.

Ewing (42) heads up Absolute Capital Management (ACM), a still relatively small but very successful manager of a portfolio of hedge funds that are largely focused on European equity and debt markets.

He was in at the birth of ACM four years ago, oversaw its debut on London's Alternative Investment Market (AIM) early last year, has seen assets under management grow to $3bn at present and is confidently predicting "we will hit $5bn by the end of 2007."

"We've managed to double assets under management each year through a combination of organic growth and the inflow of new investors," he boasts.

ACM's share price has trebled since it floated, a fact that has seen the company recently named as one of the six candidates for the upcoming 'AIM company of the year' award.

Acclaim like this is not new to ACM, despite its relative youth. The company was honoured to be named 'European Hedge Fund of the Year' for 2006 and has been nominated as one of four 'Leader of the Year' companies going forward to next month's 'industry Oscars' staged by the influential US magazine, Alternative Investment News.

The surge in the share price - it has doubled so far this year - reflects a combination of above-average fund performance and the transforming €75m acquisition earlier this year of a debt fund manager called Argo.

That move boosted ACM assets under management by 60pc, increased staff numbers to 70 and strengthened the group's top management team with the addition of Darren Fisk as finance director.

His arrival means that two of the group's three-strong boardroom executive team is Irish, a point Ewing is quick to emphasise.

"It's another example of the talent pool there is in Ireland and how the economy has come on so dramatically in such a short period of time," he suggested.

"What surprises me though is that while Ireland has managed to attract the world's main financial services companies and now has a thriving financial services sector, there are no hedge fund managers to talk about.

"There is a well established hedge fund administration business in the country and the Irish Stock Exchange is the market of choice for many funds to list, but no asset managers in this sector have located in Ireland. It's a loss of important business," he comments.

Ewing is at a loss to explain why other asset management disciplines are well represented but not hedge funds, pointing out that one of the reasons for a recent visit to Dublin was to try and recruit local investment talent. "There's no shortage in the country," he says.

Another reason was to meet up with old golfing buddies in the north west. Ewing still golfs off a of handicap of 2 having rubbed shoulders in his younger days with Ireland's best amateurs when he played off scratch and represented Donegal.

His early years were spent in Sligo and after a brief spell in Dublin the family headed back west, and he to Summerhill College in Sligo.

On leaving school, he joined his uncle who ran a small engineering business in Letterkenny, attended the local regional college for a while before studying accountancy at the University of Ulster.

It was around this time that he began to develop the interest in asset management when he was invited to run the investment arm of a Letterkenny building society agency.

"This covered everything from tax planning to discreet portfolios for the great and the good of the area," he recalls.

Contacts established during this period included Hichens, Harrison & Co, the oldest firm of stockbrokers in the City (London).

They had identified an investment opportunity and invited Ewing to join them in late 1995 in acquiring the Bristol fund management business, IPS Capital Management, for £2m.

A bit later IPS reversed into Farlake, a property company listed on London's junior stock market (now AIM). The property interests were sold off and the business refocused on asset management in the south west of England.

There was an online funds trading business called Funds Direct within Farlake, and Ewing says he did a deal to buy it out as part of deal to separate the various interests.

"I invested £10m putting together an online funds trading system that could be used by the banks," he explains. The result was a system over which banks could trade some 36,000 funds across 13 European countries.

Ewing went on to sell the business to the Pru for £32m in 2003.

Sometime before this he had hooked up with Florian Homm, the third executive director and largest single shareholder in ACM with 25pc.

They joined forces with some Swiss investors to invest in a company called Fortune Management, out of which ACM evolved two years later.

Ewing says that he hired McKinsey "to come up with the ideal product solution for a modern global fund management business and out of this the ACM model evolved.

"We are building a fund management business using modern portfolio methods to protect investors' capital," he explains.

In this regard Ewing, points to the fact that ACM has suffered very few downtimes - negative months in hedge fund parlance.

"We don't take big market bets with client monies," he explains. "The maximum exposure to a market is 30-40pc net exposure," he adds.

ACM's investment strategy is heavily event driven, and Ewing says the company's funds have capitalised on more than 50 M&A deals since it started. ABN and Volkswagen are just two of them.

ACM's operating model differs significantly from those of other hedge funds and this may be one of the factors that has attracted a small number of high profile Irish investors into the funds.

With the minimum investment set at $250,000, ACM funds would be a bit rich for most punters, however.

Bonuses are set as a percentage of the firm's earnings, rather than having individual bonuses tied to individual fund performance.

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