Japanese Hedge Fund Soars Following Debut

Aug 31 2009 | 1:09pm ET

A new Japanese hedge fund founded by a pair of UBS veterans is off to a flying start.

Akito Capital’s eponymous hedge fund is up 14%, just over a month since its launch. The market-neutral offering could be doing even better: According to firm founder Koichiro Yamaguchi, in simulated trading since Akito Capital’s March founding, the fund is up 30%.

The firm’s early success is due to its bets on smaller companies, including DVD and CD store chain Geo Corp. and automotive parts retailer Yellow Hat, Bloomberg News reports.

“Mid- to small-cap stocks tend to have less consensus views, so there are more opportunities to invest in surprises.”

Yamaguchi, who previously worked as a hedge fund manager at Horizon Asset International, said the fund, which launched on July 24 with ¥1.4 billion (US$15 million), said the fund invests in between 100 and 200 names after performing fundamental analysis on a universe of about 500 Japanese companies. Akito hedges with index futures and options.

Akito should grow to about ¥1.9 billion (US$20.4 million) by next month, according to Yamaguchi, who founded the firm alongside fellow UBS Securities Japan veteran Tetsuya Hamano. The fund’s strategy has a ¥30 billion (US$322.8 million) capacity.

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