King Tide Asset Management
King Tide Asset Management aims to produce superior returns by selecting managers with superior track records. We are particularly focused on new funds by seasoned managers – a common source of superior returns.
Using lessons learned over 30+ years, we manage risk through a portfolio of managers with diverse approaches who, by virtue of their talents, backgrounds and fund sizes, have competitive advantages in their areas of focus.
“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you.” – Warren Buffett
At King Tide we focus on the people. We are invested in a manager’s background, education, and the way they structure their fund and their business. All need to be in agreement with our core values of client alignment, skin in the game etc.
“Arrogance is not a virtue, humility is. If you look at the most valuable, most impressive people in the world, they are generally people who have a certain amount of humility to them.” – David Rubenstein
Great managers are aware of what they don’t know, are quick to recognize mistakes and misconceptions, and are open to criticism and opposing views.
As Howard Marks says “There are two kinds of people who lose money: those who know nothing and those who know everything.”
“Skin in the game means that you do not pay attention to what people say, only to what they do, and how much of their neck they are putting on the line” – Nassim Taleb
In funds management the correct manager incentives are vital for getting the desired outcome for investors. We prefer to co-invest with managers who have substantial personal investments in their funds. It is often the case that the fear of losing one’s own money is a great way to focus the mind.
We also prefer performance fee structures which incentivize performance over asset gathering.
“The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.” – Benjamin Graham
We believe that higher returns are achieved through managing downside risk, as Warren Buffet says: “You make money by not losing money”.
We therefore limit our universe to those managers for whom controlling risk is at the front and centre of their investment process and who demonstrate they have the skill and/or tools to enable them to protect capital. This generally includes the ability to short-sell stocks but may also be through the use of derivatives, a high weighting to cash or simply by buying stocks with a high margin of safety.
In addition we minimise manager specific risk by diversify across a number of managers who in turn utilise a variety of investment styles.
“All the skill in the world is for naught unless you have an opportunity to apply it. Before figuring out how you will win the game, figure out which game to play.” – Michael Mauboussin
We believe there are good opportunities for active management in Australian and New Zealand equities.
The Australian market in particular is extremely dynamic with a high dispersion of stock returns amongst the more than 2,000 listed companies. Included in this number are more than 650 companies with a market capitalization above A$100m, with approximately 100 new companies listing on the Australian Stock Exchange each year.
Add to this a high degree of both foreign and retail ownership and relatively low levels of research coverage and we have a fertile hunting ground in which active managers can generate alpha.
“The giant disadvantage we face is size: In the early years, we needed only good ideas, but now we need good big ideas…a problem that increasingly erodes our strengths.” – Warren Buffett
We have observed that skillful investors often prosper when they can control their own destiny, meaning they can manage money in the way that best suits their investment style, which frequently leads them to limiting the size of their funds before it impacts performance.
This is one of the prime reasons we prefer to co-invest with boutique managers who focus on performance over gathering assets. These managers often run small funds with flexible mandates – that assists them to protect capital – and who invest a meaningful amount of their personal wealth alongside us.
King Tide’s Background
- Founded in 2011, King Tide Asset Management is a New Zealand based alternative investment manager for wholesale and institutional investors.
- The King Tide NZ/Australian Long/Short Equity Fund invests in Australian and New Zealand domiciled equity funds. The fund offers professional manager selection, robust portfolio construction, better risk monitoring, thorough and cost-effective due diligence, broad diversification, and access to some of the world’s best equity managers.
- King Tide Asset Management is majority owned by its directors who are also amongst the largest investors in the fund.
King Tide’s Directors
Mark is the co-founder, shareholder and director of King Tide Asset Management. Mark also owns Saxe-Coburg Limited, which manages private client portfolios for NZ investors. Mark has more than 27 years experience in this role and has been allocating capital to absolute return managers since 1991. Mark has always believed that financial products are generally created with the issuers interests in mind rather than the investors, and so, when putting King Tide together, Mark has ensured that investor interests are first and foremost.
Rob Campbell has over 30 years’ experience in investment management and corporate governance. Currently Chair of Tourism Holdings, Summerset Group Holdings , WEL Energy/UltraFast Fibre , SkyCity Entertainment and a director of Precinct Properties. Rob is also a director of or advisor to a number of hedge and private equity funds in a number of countries including Silverfern Co-Investment Partners (US) and Board Member, Serica Balanced Credit Fund (HK). Rob holds the degrees of Bachelor of Arts with First Class Honours in Economic History and Political Science and of Master of Philosophy in Economics.
Geoff moved back to New Zealand in 2013 after 25 years in USA. He mentored full-time at the Lightning Lab accelerator soon after arriving back and then joined LearnKo as a co-founder and Chairman. He has since joined several advisory boards and mentor several start-ups and joined the Morgan Foundation think tank in September 2014 to investigate the area of education in New Zealand. Born in Timaru, New Zealand, educated at Timaru Boys High with Masters of Commerce hons from University of Canterbury. Geoff spent 5 years travelling, including a year with the Old Mutual in South Africa where he discovered the stock-market.
A one-step ahead, no surprises approach
Our investment approach is based on a disciplined investment research and due diligence process that measures risk while identifying the elements that drive manager outperformance over time. We work with talented management teams to achieve superior risk-adjusted results.
Our research approach is exhaustive in all phases including maintaining a detailed database, regular on-site visits, performance attribution and manager position tracking, correlation analysis, industry reference checks and frequent manager calls.
Because we are risk averse and don’t like surprises, we monitor intensely and constantly evaluate all portfolio holdings.