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Nordis Capital: Using Financial Markets to Address Key Societal Issues

With expertise in asset management, financial research and public policy, Nordis Capital (NC) provides investment solutions that help achieve higher, long-term risk-adjusted returns while committing to sustainable development. As conveyed by its inspirational website, the young firm aims to preserve and grow the world’s human, social, natural and financial capital.

The outstanding diversity of knowledge of the team, as well as   an investment strategy based on mitigating climate change and reducing social inequalities are among NC’s distinctive characteristics. The company works to change the world, one investor at a time.

“As Montréal positions itself as a sustainable finance hub in North America, our goal is to make our new investment firm and our world-class research company key players of this ecosystem.”, explain François Boutin-Dufresne, Managing Partner at Nordis Capital.

Research: A Steppingstone for Smart Investing

It was a logical choice for François B.-D., one of Nordis Capital’s Cofounders, to focus the firm’s operations on priorities determined by environmental, social and governance (ESG) issues. Indeed, as one of Québec’s pioneers in the field, he wrote his master’s thesis on the risks of sustainable investment over 20 years ago. With this interest and building on his experience in   international development financing, economics, strategy, and financial markets, his ambition to use capital markets to tackle social inequalities and climate change led him to launch Sustainable Market Strategies (SMS) in 2018. The sustainable investing research firm has published over 250 responsible investment strategy notes that are read by esteemed clients around the world.  

François Boutin-Dufresne, Managing Partner at Nordis Capital

NC is therefore a natural “offshoot” of SMS: an applied version of the research company. The firm was arecipient of an honourable mention in the “Innovative Approach to ESG Integration” category as part of the Great Canadian ESG Championship #ESGChampionship held in the spring of 2022. This is a testament to Nordis’  dedication to developing investment strategies that are aligned with its values, namely the key topics in building a better future.

In an era when it is all too easy for  asset managers to use greenwashing to attract investors with so-called “green” portfolios, Norids  prefers to put words into action and it does not hesitate to use   innovative strategies like its Long/Short Global Alpha ESG fund, which focuses on MSCI ACWI shares, fixed-income markets and commodities.   “We did our homework, through years of research, which  allowed us to launch a product of proven quality that was already quite green before we decided to promote it as such”, François B.-D. explains, clearly proud of NC’s uncommon approach.

Investing in Change

The transition in today’s investment world calls for innovation,. “We are in an excellent position to meet today’s striking needs when it comes to protecting our environment; fighting against social inequalities; managing socio-demographic phenomenon such as the retirement of baby boomers, or geopolitical ones and the historic inflationary increase”, François Bourdon, NC Managing Partner, mentions.

While everything that has to do with ESG issues is often seen as a constraint and a set of risks to manage when investing, the firm wants to show how the current transition involves not only energy, but also many other environmental and social aspects. “There is a wealth of opportunities to seize and if our fund becomes  successful, it’s because investors have understood how ESG is not simply a reporting exercise, it’s actually an essential part of macroeconomics”, Lenka Martinek, NC Managing Partner, highlights.

In 2020, the SMS team therefore realized it could use its research to generate a lot of alpha through responsible investment. Inspired by a recommendation from several industry stakeholders, that’s when NC’s founding committee launched its flagship hedge fund (Long/Short Global Alpha ESG) with its own capital. Since then, the firm has shown the strategy’s ability to deliver  great results and receive critical early investments from QEMP the following year. A true kick-off for NC, QEMP’s support also helped build confidence among institutional clients.

A Unique Team

Unlike many asset management firms that were founded by teams  that had been working together for a long time, the SMS-NC clan was formed around 2017. François B.-D., who has known SMS’ Cofounder Félix-A. Boudreault since high school, convinced Félix to join him on this adventure. Previously, Félix was the  Director, Policy and Negotiations for Environment and Climate Change Canada and took part in the energy transition as an engineer at the Canadian Ministry of Energy and Natural Resources. Passion for finance and climate issues brought the two entrepreneurs together.

As an actuary and with an insatiable  thirst for knowledge, François Bourdon started his career in the insurance sector. He was then drawn to the investment world and worked at Fiera Capital for several years as a Portfolio Manager and Global Chief Investment Officer, where he gained investment management experience in various asset classes. “What attracted me to sustainable finance is the desire to change the way capital is distributed”, he says. “When François B.-D. called me, he was the second person to propose a new project to me and once I left Fiera Capital, I knew right away that this is what I wanted to do. , I joined the firm in September 2020”, he recalls.

Lenka Martinek, the youngest of the group, has always been driven by the search for answers and macroeconomics are simply in her DNA. “I’m like the child in the family, constantly asking ‘But why??’”, she explains. She made a career out of her quest for explanations;  as part of her experience at BCA Research, she analyzed the financial marketplace to understand things like the reasons why unemployment rate is different from one place to another, and how that impacts monetary policy and capital allocations. Lenka then chose to take the leap from macroeconomic research to investment management and joined PSP Investments as Portfolio Manager, Currencies and Global Macro.. Before turning 40, she was noticing a gap between her non-professional  preoccupations  and the time it was taking for the investment industry to react to climate change. She completed a master’s degree in sustainable development and management at HEC Montréal to, you probably guessed, find the source of such a gap between needs and market inertia. This is when François Bourdon convinced her to join SMS. “The Nordis project really spoke to me, because it is  the application of fundamental research to influence outcomes surrounding critical challenges that we will be faced with for decades.”, Lenka says.

This unique team’s strong set of skills adds to the benefits of an emerging firm that is focused on results and is highly driven, as well as contributing to the  local sustainable finance ecosystem. The company developed its infrastructure from scratch and in the process, has created interesting job opportunities that appeal to people with diverse talents, which is also an asset for a firm like NC. “And what we do engages certain clients who are not necessarily the most active in sustainable investment, which diversifies our group of investors”, François B points out.

In the years to come, the NC team will work to generate  solid returns to expand its client base and focus on its goals:  to leverage capital markets to reduce the impact of climate change and fight against  social inequalities.

To know more about the firm.

Nordis member’s file

Auspice: from $250mm to $1bn and beyond. 

When the Auspice Diversified fund delivered +7.6% during the onset of COVID in Q1 of 2020 and +18.4% full year, it reaffirmed a message Auspice has been communicating for 16+ years: “in crisis periods, we have never missed”.

Then something else happened the founders had been betting on for years – commodities came back to life.

A Tremendous Trajectory

Launched in 2006, Auspice benefits from Founders Tim Pickering and Ken Corner’s extensive experience in commodity derivatives trading and risk management developed first at TD Bank and then Shell North America.

The Auspice brand draws from the word auspicious, which means ‘a sign of good things to come’ as well as ‘protection or support’, highlighting the positive impact the company may bring its clients’ portfolios while preserving capital and managing risk. The logo (an endless knot) is derived from one of the Eight Auspicious Symbols of Tibetan mythology and symbolizes the Union of Wisdom and Method.

This captures the essence of the Auspice philosophy, which combines the wisdom that markets are inefficient and are driven by emotion, together with the application of rules-based methods to identify and capture these inefficiencies.

Listed among Alberta’s 50 most influential people by Alberta Ventures in 2015, Founder & CIO Tim Pickering consistently seeks disruptive ideas, a goal that is certainly relevant when it comes to portfolio management.

Tim Pickering, Founder, President and CIO of Auspice.

Auspice’s product suite is designed to meet varying investor preferences. From crisis and commodity alpha solutions to a new “equity-replacement” multi-strategy that is rare in Canada, Auspice has developed a core set of quantitative strategies that can be delivered in a variety of structures for investors.

A milestone for the firm was in July 2020 when Auspice partnered with Walter Global Asset Management (Walter GAM), a Montréal-based, globally diversified private equity platform. The partnership has been fruitful, Auspice’s assets under management have since more than tripled from $250mm at the end of 2020 to over $800mm today, with a clear path to $1bn in the next few months. “Historically, we mainly partnered with select institutional investors”, Tim mentions. “However, we have had a surge in retail investors over the last couple years. Institutional investors are now starting to come back to commodities however, and we have some large and exciting partnerships in development.”

Relationships have always been core at Auspice – in the prior few years Auspice saw many of its’ competitors shut down as the abnormal environment created by quantitative easing led to a challenging opportunity set for their strategies. Relationships – partnerships with forward thinking, like-minded investors – kept Auspice vital.

Much has changed in the last couple years however. “What was successful in the last decade isn’t really working anymore or really expected to do so going forward”, Tim points out. “When you look at pretty much any study of what has had the best results over all inflationary periods of the last 100 years, commodities and trend following have been among the top performing strategies.”

The Edge – “Agility”

When the COVID-19 crisis struck and most traditional and alternative funds struggled, Auspice delivered. Be it the global financial crisis of 2008, COVID, or today’s inflationary surge, Auspice’s trading strategies were designed to be agile and have delivered strong performance in a variety of crisis periods. “We began our careers trading natural gas – one of the most heretic and difficult markets to trade”, Tim explains. “Natural gas at a 30 volatility is very different than natural gas at 130 volatility. We had to design systems that could be agile and robust across varying regimes.”

This agility has proven itself in multiple regimes, however as Tim will make clear, “it is not the panacea”. In periods like 2019 where inflation and volatility are at historic lows, the strategies can struggle. 2015-2019 broadly was a challenging period for commodity fund managers and CTAs. Not that they hurt a portfolio much, they simply aren’t that exciting.

However 2020 marked a return to more normal conditions where volatility and inflation aren’t artificially compressed. Quantitative easing has ended, rates are rising, and commodities have just broken out of a decade long bear market.

Tim Pickering has seen this all before. When he focused on commodities in the late 1990s, people told him he was crazy. It was the tech boom and people thought he was throwing his career away. Tech soon cratered, commodities came into focus, and it was a great trading environment for 15 years.

He was younger then, lacking the experience that comes from surviving a historic commodity bear market. Today is different. Auspice has built a highly talented team alongside a number of key partnerships. With a long and successful track record in what notoriously has been one of the most challenging and opportune asset classes, few firms have the infrastructure and expertise in commodities Auspice does.

“The office is buzzing – with excitement, with phone calls – every day is a marathon”, Tim says. “We’ve been around for a long time, but if you ask me, we’re just getting started.”

To know more about the firm.

Auspice member’s file

Macroeconomics and Diversity in Human Capital at Mount Murray Investment

As part of his extensive experience with various prominent companies, Vincent Dostie served as Vice-President of Investments for a multi-family firm. There, he hired portfolio managers, led business development and oversaw asset allocation for some forty wealthy Québec families. He remained interested in investment analytics and decision-making, so his flagship project was to establish an independent asset management firm. The first few team meetings of this Montreal startup, which was incorporated in 2016, took place on Mount Murray, one of Mount Royal’s three hills.

Vincent founded Mount Murray Investment with two former colleagues from Caisse de dépôt et placement du Québec (CDPQ). “It takes a great deal of courage to start your own business independently, and my previous opportunities working at investment startups were extremely rewarding, helping me in progressively reaching this important decision,” the firm’s CEO and Co-Chief Investment Officer (CIO) mentions. 

Vincent Dostie
CEO and Co-CIO

The intellectual challenge in investment was a key factor for Vincent when choosing his field of expertise. The fast-paced markets, analytical work and limitless research involved, as well as the joy of implementing one’s ideas, are all aspects that prompted him to pursue a career in this industry. “You get hooked once you’ve worked at CDPQ, where you have access to all the resources in the world to stay ahead in the global investor market,” he points out. “You see it when you speak to new graduates, how this line of work actually makes people dream, as you can truly surpass yourself if you’re really well organized and you work efficiently.”

A Higher Viewpoint

While he was working with startups, Vincent thought about investing further in emerging markets, which is still a key strategy for Mount Murray Investment today. “Keith Porter, the company’s Co-CIO, was in charge of a large CDPQ team that was focused on investing in these markets,” Vincent relates. “It’s a rather rare expertise in Montréal and it’s great for investors to be able to seek advice directly from a seasoned local manager, to explain what emerging markets are exactly,” he says. “As well, for an asset manager who invests significant amounts of money for clients, it’s always helpful to get a sense of the character of the people you invest with, and this is easier to do when you’re dealing with a local firm.”

A highly inclusive organizational culture is another one of Mount Murray Investment’s assets. To build a team with a wide range of skills, the firm pays special attention to applicant selection and employees’ engagement in internal discussions. “Everyone has their place, whatever their level of experience, and I would say we have a modern vision when it comes to investment,”  Vincent states.

The firm aims the structured integration of large amounts of data to its macroeconomic analysis, based on a top down approach, in addition to the fundamental research conducted by its team of analysts and managers about portfolio companies. “Emerging markets are seen in many different countries worldwide, and we feel value may be added through a strong macroeconomic structure to help pinpoint certain regions that may be more promising at times,” Mount Murray Investment’s CEO remarks.

Also, as an emerging portfolio management firm, the company naturally has an innovative outlook because it’s currently developing its own methods and processes, as well as its team. “Many studies have shown that emerging portfolio managers generate better returns than those with more established assets,” Vincent reports.

In keeping with a style that is firmly rooted in today’s reality, Mount Murray Investment addresses the new American President’s focus on the climate crisis in the firm’s latest newsletter. “We would like to think 2020 was the year of the ultimate recognition of ESG priorities. This new emphasis will benefit various sectors of our portfolios.”

Peaks in Value for the Client

Along with competitors of the industry, the firm must face the downward pressure on asset management costs. “This is partly caused by passive investments, i.e. Exchange Traded Funds (ETFs),” Vincent observes. Since the company specializes in emerging markets and targets the addition of significant value compared to its core index, assessing risks and adopting a long-term perspective, it can justify its current fees. “In fact, you should ask yourself if during an entire stock market cycle, your clients’ returns minus your expenses are higher than those of the market, because if that’s not the case, they should have of course simply opted for an ETF,” the firm’s CEO concludes.

Acquiring a critical mass of assets under management for cash flow is evidently another one of the challenges faced by new investment firms such as Mount Murray Investment, and this firm places a lot of value on the quest for talent as well. “Because we have a small, specialized team, and each member of this team plays a major role, it is essential we find people with the right, complementary skill sets, and design an excellent onboarding and long-term training program,” Vincent explains. “In terms of raw talent, we are so lucky in Montréal, there are professionals with diverse skills and backgrounds, from good universities, and we’re able to hire people from countries where we invest, which is really interesting.”

One of Mount Murray Investment’s growth objectives is the optimization of its analytical systems in order to track a growing number of data, as efficiently as possible and in real time. The firm also wants to set up international research teams, while maintaining a vibrant central team in Montréal. All this to continue to provide clients with the best returns possible.

Mount Murray Investment’s member’s file.

To know more about the firm.

Webinaire «Montréal peut-elle devenir un centre d’excellence en IA/ML en finance et gestion d’actifs?»

March 30, 2021 @ 10:00 AM 11:30 AM

Contexte et Vision Montréal est reconnue mondialement pour son écosystème d’intelligence artificielle (IA), mais, la plupart des projets de recherche et applications sont orientés vers des secteurs non financiers. Il y a donc une lacune – «a missing link» que le projet FIAM (Forum d’Investissement Alternatifs de Montréal) vise à combler. Ce premier webinaire d’une série d’événements organisés par FIAM avec ses partenaires, vise à recueillir commentaires et suggestions de gestionnaires de portefeuille, de chercheurs, scientistes de données, d’entrepreneurs, d’étudiants, de fintech, de dirigeants de fonds de pension, et autres parties prenantes, sur l’importance de combler ce vide. Ce qui permettrait de contribuer à la vision de FIAM de faire de Montréal un Centre d’Excellence reconnu au niveau Canadien et à l’international grâce à des affiliations / partenariats avec des organismes, universités, Instituts qui œuvrent dans le même espace. Programme Partie 1 :  tour de table – chacun panéliste présente comment la science des données (AI / ML) entre dans leur stratégie, processus de gestion et/ou projets – défis, succès et déception Partie 2 : Échange type “brainstorming” sur le thème central, Est-ce important de combler ce vide? Que faire? Les Fintech ont-ils un rôle à jouer? Avons-nous le bassin de talents nécessaire? Quels devraient être les intervenants clés? Importance du maillage avec les universités etc… Conférenciers – Claude Perron, Président Émérite, Gestion Cristallin et fondateur de FIAM – Carl Dussault, PDG et fondateur, Evovest – Jérémie Desgagné-Bouchard, Associé et Directeur scientifique, Evovest – Karl Gauvin, Consultant en Gestion d’Actifs – Christian Felx, Directeur, Recherche et Investissement Responsable, Desjardins – Jean-Marc Patenaude, Président et VP Technologie, Laplace Insights Modérateur  – Michael Albo, PDG et fondateur, Data Science Institute

Details

Date:
March 30, 2021
Time:
10:00 AM – 11:30 AM
Cost:
Free
Event Tags:
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Website:
https://fiamtl.com/webinaire-2021/

Organizer

Emerging Managers Board
Email:
info@emergingmanagers.ca
Website:
View Organizer Website

Global Alpha Asset Management : Mastering the Art of Small-Cap Selection

The Global Alpha Asset Management team alone has a combined experience of over 60 years in the small-cap sector. It is by focusing exclusively on its expertise and deepening it meticulously that the Quebec-based firm has enjoyed great success, particularly in the North American institutional market.

David Savignac, CFA
Portfolio Manager

From the moment they joined forces to create Global Alpha in 2008, Natcan’s two former colleagues, Robert Beauregard, Chief Investment Officer, and David Savignac, Chief Operating Officer, had a game plan that remains essentially the same to this day: keep their focus on small-cap companies. In other words, its managers are entirely dedicated to what they do best, which is building global and international small-cap equity portfolios. They also called upon Qing Ji, an analyst of the Montreal financial community that they knew well, to join their project as a portfolio manager since they were convinced that her profile was perfectly in line with their vision.

In addition to building on their shared knowledge of small-cap investing, these managers also realized that the same passion was fuelling their career ambitions. “We all had entrepreneurial spirits. I come from a family of entrepreneurs. I’ve been involved, in real estate and the business world in general, including renovation centres. Today, we are eleven employees at Global Alpha and each of us has industry experience. Our background allows us to better connect and dialogue with the leaders of the companies we meet,” explains David Savignac.

Successful Findings

Global Alpha presents itself as an investment firm that conducts independent fundamental research to identify attractive investment opportunities in companies whose growth is unrecognized by the marketplace. “Research and analysis on smaller companies are often limited or not widely communicated, leading to the mispricing of such companies’ securities,” the group says on its website.

Specifically, this market inefficiency creates an opportunity for managers interested in small-caps to uncover companies with unrecognized potential growth for their clients’ portfolios.

To do so, the Global Alpha team conducts diligent and comprehensive research across a broad investment universe that includes all companies with market capitalizations between US$100 million and US$5 billion. The managers take the time to travel to each region and visit companies that present investment opportunities that they believe are attractive.

“That’s what motivates me to do what I do – to look for promising new companies. Meeting entrepreneurs is extremely interesting. Plus, it’s never boring work because you have to constantly learn about companies and stay on top of the latest trends in different sectors. It’s very rewarding!”, shares Mr. Savignac, who has travelled throughout Europe and Asia on numerous occasions in search of rare gems that would contribute to the investment strategies offered by Global Alpha.

A Thematic Approach

Moreover, Global Alpha examines the valuation of a security according to an investment thematic and not simply based on a bottom-up approach. For example, its managers consider a solid company that benefits from positive long-term trends, such as environmental preservation, to be an excellent investment.

David Savignac gives the example of Tomra, a company that Global Alpha held for a long time in its portfolios before selling it because it had become too large to be considered a small-cap. Tomra is an international company of Norwegian origin specialising in machines equipped with sensors to collect and sort waste in order to reduce waste.

“Tomra owns 75% of the reverse vending machines market. These machines, among other things, allow people to recycle aluminum cans, glass and plastic bottles, while receiving change in exchange for their deposits. With 82,000 machines installed around the world, Tomra has collected more than 35 million empty bottles,” he reports.

In addition to having a positive impact on the planet, the company has experienced significant growth during the years that Global Alpha has held its stock. In fiscal year 2017, Tomra reported sales of US$900 million and an EBIDTA of US$177 million. As of December 2019, the company’s annual growth was 10.5% over the previous three years.

Propelled by Its Structure

Global Alpha’s strategy as an emerging investment firm has also been to establish a structure that allows its managers to focus exclusively on building the best global and international small-cap portfolios for their clients.

Global Alpha is, therefore, part of the Connor, Clark & Lunn Financial Group, which supports the firm in non-investment management tasks such as sales, marketing, compliance, and information technology. “We knew from the start that we were going to target the institutional market and that’s why we created this structure which is very appealing to large American clients,” says Savignac.

Global Alpha, which initially won a first institutional mandate of approximately C$7 million, now manages close to C$5 billion and 65% of its assets come from its U.S. clients. It is the programs for emerging U.S. managers that have allowed the firm to take off because it is through one of them that the investment firm was able to acquire its first significant U.S. institutional mandate in 2013. “The performance of our strategies already spoke for itself, but getting such a mandate for a US state showed our seriousness to other potential clients of the same type,” says the portfolio manager of Global Alpha.

The firm strongly believes in the importance of such programs to support emerging managers and is also committed to similar Quebec initiatives such as the Emerging Managers’ Board (EMB) and the Quebec Emerging Manager Program (QEMP).

“There certainly is a strong interest for local investment in Quebec. Many investors are increasingly aware of the importance of encouraging local emerging managers. For example, they understand that in a city like Montreal, entrusting their assets to local firms generates economic benefits throughout the ecosystem since these firms, themselves, hire numerous professionals in their area (translators, lawyers, notaries, etc.).

For more information regarding the firm.

To see the member’s file.