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Fairlight Capital: Best Emerging Manager Fund – Equity Hedge

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The last 18 months have been a very challenging period for everyone. However, as a small company, Fairlight Capital was already working via video calls and using cloud file storage meaning work challenges were not as great for them as for some others. 

Responding to Covid-19

In fact, Andrew Martin, Managing Director of Fairlight, says: “In terms of meeting with investors and arranging third-party calls, the acceleration of remote-working technologies has probably helped us.” 
He adds: “We believed that the markets and economies would bounce back strongly after the dip in March 2020, and so we rotated the portfolio, using the volatility to our advantage, to reposition the portfolio for recovery and subsequent growth. We have done well in finding cheap valuation, quality stocks that also have excellent growth. We have focused, and will continue to have a global focus, on stocks that has enabled us to find better value and businesses across different regions.”

Looking to grow

To build on this performance, Martin says: “We will continue to follow the same processes and approach as we have always done, using growth and value metrics combined with deep fundamental analysis and business quality analysis. As we grow the universe of stocks, we look to migrate to larger companies, but we are still an emerging, smaller fund and so we have a long road ahead of us.”

For now, Fairlight are focusing all their efforts on the current portfolio, but soon will consider launching an AI fund that utilises machine learning to match the investment processes they follow in an automated way that will allow them to scan the global universe of stocks on a real-time basis, using the same approach that has led to its success so far. 

Martin comments: “The model we would employ for such a fund would be based on our internal criteria, rather than historical returns, to ensure that it is future-proof and matches our investment process as closely as possible.”

Reflections and realisations

As the markets recover from the impact of the pandemic, Martin says that Fairlight have realised that they need to own the fact that they take on a certain kind of risk: “Ours is to have full market exposure and concentrated positions in names where we have a strong conviction,” he says. “We avoid too much diversification (beyond 8-10 names) in order to maximise returns.”

Over the last decade, long-short equity funds have struggled in comparison to CTA and fixed income strategies. Assets have moved out of long-short equity into index funds and ETFs as well as prominent tech names and themed assets. Fairlight believe that there is a lot of potential for future outperformance in long-short equity funds that work hard at stock picking and fundamental analysis.

Going forwards and as Fairlight’s AuM grows, it will migrate to look at larger businesses to invest in, although the approach will stay fundamentally the same. 

“I believe that what has worked for us in the past will continue to work well in the future, but we will likely have to work even harder to search for undervalued, hidden gems and continue the level of successful performance we have achieved so far,” Martin concludes. 


Andrew Martin, Chief Executive Officer, Managing Director, Fairlight Capital
Andrew Martin has over 17 years of institutional investment management experience working for large global insurance companies and asset managers managing multi-billion-dollar portfolios. He has developed, structured, and successfully launched several multi-billion-dollar funds and investment structures. He began his career as a Business Consultant with Accenture, working in the energy and financial sectors. Martin graduated with a BSc in Theoretical Physics from the University of York and gained a Doctorate in Astrophysics from the University of Oxford.

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