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Alternative Market Briefing

Long-biased equity manager remains cautious on risk assets

Thursday, April 21, 2022

Mathias Wikberg
B. G., Opalesque Geneva for New Managers:

According to this London-based fund manager, now is not a good time for risk assets but there is opportunity in uranium, copper, tin, fertilizers, and oil.

In the current environment, Agera Capital is positioned very carefully as the risk/reward looks unfavourable. Global economic slowdown, a squeezed consumer, spiking inflation, slowing sales and margin compression, and central bankers that are way behind the curve; all those factors are potentially a toxic combination for risk assets.

CIO Mathias Wikberg has run the investment strategy as a family office since October 2019 and founded Agera Capital, a multi-strategy investment partnership early last year. Prior to this, he was a senior portfolio manager at the Cambridge Strategy, a $3bn systematic hedge fund in London, and portfolio manager at Visor Holding LLP, a $2bn Asian private equity group. He also worked at Aviate Global, E2, and Nordea focusing on emerging market equities.

The founder's background is managing large mandates in emerging market equities where understanding macro factors, policy, fund flows, and sentiment is critical. Combining value investing fundamentals with top-down macro models allows for superior returns while minimizing drawdowns.

He will present at the Manager Discovery Panel webinar on May 3rd, at 11 am ET.

The global central bankers are not the market's friends anymore, he says in his latest investor update seen by Opalesque. Inflation kills every bull market and there is a chance that in fighting inflation, the central banks tighten monetary conditions to the point we have an economic downturn. Furthermore, tightening financial conditions are bad for risk assets. "History doesn't repeat but it sure rhymes: our market playbook remembers what happened at the end of 2018 where the market first got scared of a tightening Federal Reserve and then sold off further on growth concerns."

Agera's long-biased equity-focused thematic strategy recorded a +3.70% performance for the month of March, compared to +1.94% for the market, Wikberg says. "We remain cautious on risk assets due to a slowing global economy, increased geopolitical tension and spiking inflation as well as tightening credit conditions. Our portfolios continue to be positioned for a highly inflationary environment."

A risk asset is any asset that carries a degree of risk. Risk asset generally refers to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate, and currencies.

Secular and cyclical thematic tailwind opportunities

Agera Global Opportunities seeks absolute returns by investing globally in stocks exhibiting secular or cyclical thematic tailwinds. Capital preservation is critical and the strategy seeks to minimize drawdowns to 10% by seeking asymmetric return opportunities, using quantitative risk models, and being nimble. In the Covid crash of March 2020, the strategy was up +7.7% by shorting banks, airlines, and Nasdaq.

Right now, "we like uranium, copper, tin, fertilizers, and oil," Wikberg tells Opalesque. "We think we are in an early-stage bull market. Demand is strong and there is almost no supply response with very long lead times. Our biggest concern for our long commodity call is a global recession which of course would kill demand.

"We are also long banks in Latin America, which benefits from strong macro, higher rates, and improved corporate governance. We like a few oversold U.S. tech names with structural tailwinds like cyber security."

Here, secular refers to market activities that occur over the long term. A secular tailwind is a social or economic trend that has an impact on the economy as a whole, as well as the companies that participate in it. A good example of a secular tailwind is the global transition toward electronic payments (e.g. credit cards and debit cards) at the expense of paper money transactions. This is a trend that has been going on for a long time, and it is set to continue regardless of any strength or weakness in the economy. Companies that are directly involved in facilitating this trend, such as Visa, are going to benefit regardless of the strength of the economy.

The strategy

Agera Global Opportunities is a strategy that uses fundamental stock picking with a thematic overlay to build positions in approximately 20-30 global midcap stocks. The strategy has an unconstrained mandate, which gives the manager the ability to pursue opportunities regardless of sector or geography. Furthermore, it looks for unique early-stage investment themes that have the potential to be medium to long-term compounders.

The strategy annualised 46% returns from October 2019 to March 2022, with a Sharpe ratio of 2.0 and a maximum drawdown of 10.03%, compared to the ACWI, MSCI's flagship global equity index, which annualised 12.6% in the same period after returning 1.9% in March. The HFRI Equity Hedge (Total) Index was up 0.5% in March.

Agera means "to take action" in Swedish. It is also short for the ancient Greek word Ageratos which means "ageless".

Next Opalesque webinar:

Manager Discovery Panel: London

Meet five brilliant fund managers and hear their presentations in this interactive webinar.

• Theron de Ris, Eschler Asset Management
Richard Simons, Derby Street
Mark Walker, Tollymore Investment Partners
Christian Putz, ARR Investment Partners
• Mathias Wikberg, Agera Capital

When: Tuesday, May 3rd, 2022, at 11 am ET
Free registration here:

Related article:
28.Feb.2022 Opalesque Exclusive: Agera Capital looks for megatrend opportunities in emerging markets

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