Economy & Capital Markets:
In September the US Fed, revised expectations of 2021 growth down to 5.9% and inflation up to 4.2% whilst, indicating the Federal Funds rate will rise to 0.3% in 2022 and then to 1% in 2023.
The Peoples Bank of China views: contact-based consumption constrained, problems for small businesses and manufacturing and, fiscal imbalances for several regional governments. However, in a refreshing contrast to western bureaucrats, will maintain money supply in-line with economic growth and leverage stable. It will manage the RMB with reference to a basket of currencies, currency flows and balance of payments. It also seeks to improve bond default resolution and to stabilise land and house prices. The 14th Five Year Plan commenced in 2021 and, in Q2 2021 monetary policy returned to normal as before the pandemic.
Kings’ Portfolio (Global Mega Cap Long/Short Equity Investing):
In Q3 2021 the Kings portfolio returned 1.6% (7.2% ytd) with a 0.66 Sharp (0.69) out-performing both the World & US indices on a risk adjusted basis (Sharp). Relative out-performance was due to contribution from our short positions. Top contributors were long Paladin Energy 1.21% (Australian uranium), short Brilliance China Automotive 1.08%, short Fibrogen 0.86% (US pharmaceuticals). Biggest detractors were our legacy long position in GBP -1.93% and a long position in Xtep International -0.63% (Chinese sportswear).
Belsize Strategy (Macro & Global Futures Trading):
In May, with the advancement of the firms AI abilities, this long-standing strategy which provided excellent returns during the 2007/8 financial crisis was restated. Results are steady improving inline with trading, risk limitation and machine learning calibration, and they finally overcome some expected short term fluctuations to produce a profit in the last month.
Private Equity Strategy (Illiquid Investments):
In 2021 Q2 the firm added five position (including reservations) to its first venture capital investment in 2019. Sector breakdown now stands at: 29% media & entertainment, 22% communications, 18% real estate, 18% finance and, 8% food and beverage. The technology breakdown in the portfolio consists of 60% apps, 20% hardware, 10% sharing economy and 10% e-commerce. The firm makes no positive discrimination except for the combination of good ideas and teams, however the initial investment was to a female managed business and, we have further invested in one black and two Latin managed businesses.
Crypto Currency Strategy (Inter-day Trading):
Due to the rapid development of the firm’s proprietary AI, in June a crypto trading strategy was initiated, across 11 currencies each with a market capitalisation over $1Bn. Trading, risk limitation and machine learning calibration is a continuous process. The fist two months of the quarter provided excellent results whilst in the last month these were reduced due to adverse news flow and the growing sophistication of market participants.
Artificial Intelligence & Technology Development:
Early in Q1 2021 the firm completed its software development target for the year. Apart from further improved accuracy of decision making, a surprising offshoot was increased speed. This has allowed far greater diversification across instruments and time horizons. The firm now looks to improve its human language analysis specifically truth and deception. The firm also looks to develop consultancy and possibly software offerings.
Firm Operational Update:
Since 2015 the firm has been maintained as a Californian Registered Investment Advisor (RIA) within FINRA and SEC USA government oversight. At present the firm’s administrative headquarters are in London, UK; if global travel restrictions return to pre-Covid levels we expect this to be more fluid.
The firm looks to develop infrastructure for the deployment of capital in impact investing over the next five years.