February 2017 AlphaFOR INSTITUTIONAL INVESTORS & ASSETQ MANAGERS BLOOMBERG FOR FLYING HIGH PRIVATE EQUITY Eagle Alpha’s New product from CEPRES alternative data LONESOME STOCKS SUSTAINABLE Randeep Grewal REAL ESTATE investigates Five areas of focus JAGUAR POUNCES TRENDING IN LatAm real LENDING estate opps Lending trends to watch Eastspring – the hidden giant Interview with Guy Strapp www.AlphaQ.world EDITORIAL elcome to the first issue of AlphaQ for 2017 and what a start to the year we have seen, with macro events Wdominating and the markets apparently lapping it up. We bring you a profile of Eastspring, one of the largest asset management firms in the world, with USD140 billion under management, that is not so well known outside its native Asia Pacific but whose roots lie in the much-loved Prudential. Our man from the Pru is Guy Strapp, interviewed here. If you want to get ahead in these challenging times, how about you sort your Woozle from your Eagle Alpha – we profile two firms ELEANOR ROSTRON offering a different approach to data gathering for investment managers. We also have a ‘Bloomberg’ for private equity offering from CEPRES – a FinTech company that has developed a private credit analysis tool called PE.Analyzer. Managing Editor You may not have heard about 871(m) yet but the 30 per cent Beverly Chandler Email: [email protected] withholding tax on dividend-equivalent payments for non-US Contributing Editor James Williams Email: [email protected] investors will have an impact. Your guide to this issue comes from Online News Editor Mark Kitchen Jon Brose and Craig Hickernell and Brett R Cotler of Seward & Email: [email protected] Deputy Online News Editor Kisssel LLP. Emily Perryman Email: [email protected] Finally, this month sees Randeep Grewal, our regular columnist, Graphic Design Siobhan Brownlow Email: [email protected] quote Elvis and deep dive into lonesome stocks. Sales Managers Simon Broch Enjoy the read, Email: [email protected] Malcolm Dunn Beverly Chandler Email: [email protected] Christine Gill Managing editor, AlphaQ Email: [email protected] Marketing Administrator Email: [email protected] Marion Fullerton Email: [email protected] Head of Events Katie Gopal Email: [email protected] Head of Awards Research Mary Gopalan Email: [email protected] Chief Operating Officer Oliver Bradley Email: [email protected] Chairman & Publisher Sunil Gopalan Email: [email protected] Published by GFM Ltd, Floor One, Liberation Station, St Helier, Jersey JE2 3AS, Channel Islands Tel: +44 (0)1534 719780 Website: www.globalfundmedia.com ©Copyright 2017 GFM Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Investment Warning The information provided in this publication should not form the sole basis of any investment decision. No investment decision should be made in relation to any of the information provided other than on the advice of a professional financial advisor. Past performance is no guarantee of future results. The value and income derived from investments can go down as well as up. AlphaQ February 2017 www.AlphaQ.world | 2 CONTENTS February 2017 AlphaFOR INSTITUTIONAL INVESTORS & ASSETQ MANAGERS BLOOMBERG FOR FLYING HIGH PRIVATE EQUITY Eagle Alpha’s New product from CEPRES alternative data LONESOME STOCKS SUSTAINABLE Randeep Grewal REAL ESTATE investigates Five areas of focus JAGUAR POUNCES TRENDING IN LatAm real LENDING estate opps Lending trends to watch 15 20 25 Eastspring – the hidden giant Interview with Guy Strapp NEWS FEATURES 18 Flying high James Williams profiles Eagle Alpha’s www.AlphaQ.world 04 Investigating the Woozle effect alternative data offering based on thought Woozle or evidence by citation is the leadership; data insight; analytical tools; name of a new firm offering ongoing Companies featured in raw data, and bespoke projects channel checks on global consumer this issue: companies 20 Sticking to the middle ground • BB Biotech James Williams find that, although • Bedford Row Capital 05 Beating the banks off the beaten path cautious overall in its outlook for global Advisers Interview with Alastair Evans of Bedford real estate in 2017, Hamilton Lane, an • CEPRES Row Capital Advisers alternative fund manager with USD40 • Eagle Alpha billion in discretionary AUM, does see 06 Whither biotech in 2017? some strong fundamentals throughout a • Eastspring Dr Daniel Koller, lead manager of BB good portion of the market • Hamilton Lane Biotech, writes that Biotech was one of • Jaguar Growth Partners the most widely reported sectors in 2016 22 Asia credit – a separate allocation • NN Investment Partners Yu-Ming Wang and Bertram Sarmago 07 Managing the main event of Nikko Asset Management believe • Nikko Asset Interview with Omni Event’s John Melsom that Asia credit should be treated as a Management on his approach to managing his big separate allocation, rather than part of • Omni Partners picture event fund EMs • S&P Global Ratings FEATURES • Seward & Kissel LLP 25 Jaguar pounces on LatAm real estate Latin American real estate offers an • TH Real Estate 09 Cover story: Eastspring – The hidden abundance of attractive entry points • Woozle Research giant Interview with Guy Strapp, CEO, and long-term growth opportunities, Eastspring Investments, the USD140 particularly in markets such as Brazil and billion Asian investment management Mexico arm of Prudential and the region’s largest 28 Rating US hydropower risk retail manager Michael Ferguson, director, US Energy Infrastructure, S&P Global Ratings writes 11 The 871(m) rule January 1, 2017 saw the US Internal that, despite Trump, the US is enjoying a Revenue Service implement rule 871(m). financing renaissance in hydropower Jon Brose, Craig Hickernell and Brett R 30 PE.Analyzer: the Bloomberg for PE Cotler of Seward & Kissel LLP explain James Williams writes that CEPRES how this will affect the sector has rolled out a new platform to give institutional investors a way to effectively 13 Real estate sustainability trends benchmark private capital market in 2017 James Williams writes that a new report investments published by TH Real Estate highlights 32 “Are you lonesome tonight?” five areas of focus for future real estate Columnist Randeep Grewal calls on Elvis investment including big picture trends to examine so-called lonesome stocks and industries 15 Trending in lending in 2017 Gabriella Kindert, Head of Alternative Credit at NN IP writes on trends to watch in alternative lending during 2017 saying banks will shrink their lending AlphaQ February 2017 www.AlphaQ.world | 3 ALPHAQ NEWS FEATURE Investigating the Woozle effect oozle may not be an academic term with “What is interesting to me, Wwhich you are familiar, but watch this space, literally. Nearly a year ago, Mark Pacitti, is that primary human and Charlie Ellis founded Woozle Research, a intelligence gathering actually solution to the Woozle effect theory of evidence yields interesting results, new by citation, whereby a finding gets repeatedly quoted until taken as the truth. fundamentals that people Disambiguation is another term for the aren’t talking about.” phenomenon, but doesn’t trip as easily off Mark Pacitti, Woozle Research the tongue. Pacitti was at multi-strategy firm Citadel for three years working in state of the art developments for global quantitative strategies, looking at alternative data sets such cross between equity research, but not from a as till receipts and satellite imagery. press or management statement, but going to He left to set up Woozle Research, a firm the source on the ground, sleuthing to get the dedicated to providing institutional investors information.” with primary research and equity intelligence The firm declares who they are when using human sources or what Pacitti likes to conducting research and doesn’t break NDAs, call ‘systematic scuttlebut’. but relies on a mosaic of non-material, public “What I find is that a lot of the industry uses information that in aggregate provides their buzz words like big data and machine learning,” clients with an informational edge. Pacitti says. “A lot of it is noise, so what is “It’s a mosaic of public information that may interesting to me, is that primary human be material once it has been collected as a huge intelligence gathering actually yields interesting amount,” Pacitti says. results, new fundamentals that people aren’t Their system lends itself most to consumer talking about.” firms, but the deep research team can take This mosaic of human intelligence spreads on custom projects. “We can do healthcare, across the 70 and growing consumer companies what drugs professionals are prescribing, globally that the firm covers. “It goes against or automakers, talking to dealerships and the random data collection and finding the examining the supply chain. The way we look hidden signal,” Pacitti says. “What we do is less at it is focusing on the key stakeholders in any prone to paradigm shift as we gather human country and intelligence gathering techniques intelligence sourced directly from companies and use those two mechanisms to develop under coverage.” the products.” Examples of how they