Tadashi Mukai, who outperformed all his hedge fund rivals in Japan last year, joined Tokyo-based Epic Partners Investments Co. and will start a new fund that won't bet on stocks rising or falling.
Mukai, 43, joined Epic on Aug. 20 as a senior fund manager, said Tetsuya Abe, the firm's head of compliance, in a telephone interview. Mukai was most recently at Tokyo-based fund adviser United Managers Japan Inc., overseeing the UMJ Neutro Fund, which climbed 11 percent, the biggest return among 13 market-neutral funds, in 2007, according to data compiled by AsiaHedge.
Epic Partners, established in April 2005, specializes in market neutral funds and "value" investments, where managers buy out-of-favor companies selling for a relatively low multiple of earnings, according to the company's Web site.
Details of the fund are yet to be decided, Mukai said in a telephone interview. For his former fund, Mukai used his own analyst database, tracking stock recommendations against three years of share performances, a departure from standard ratings that rely on fund-manager voting. He only followed the advice of analysts who ranked first or second in his tables.
Mukai said he will employ the same strategy for the new so-called market-neutral fund. Market-neutral funds seek to profit from both rising and falling prices by matching long and short positions in different stocks to boost returns.
The process began by whittling down Japan's 4,000 publicly traded companies to the 1,500 stocks that trade the most. Mukai then discarded those on the list not covered by analysts, focusing on research-driven ideas because market volatility had wreaked havoc with computer models that use quantitative analysis to select stocks.
Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their investments.