Geopolitical/Espionage Focused Funds
Does anyone know of or have information on hedge funds whose investment mandate/focus includes a blend of geopolitical knowledge and human intelligence assets (i.e., spies, networks, etc.)? I've spent time searching for firms that have this kind of focus, but the only one I've been able to find is the recently shuttered Horatius Fund.
I'm aware of the paradox of spies setting up an investment firm and advertising it to the world, but I was a bit surprised to find only one firm in this space. Presumably there would be at least a few ex-intelligence officers who either set up their own shop or were able to set up a group at an existing firm.
I suppose government intelligence agencies may have in-house investment groups, but I don't expect to find info on those kinds of groups via Google searches.
I have heard of ex intelligence experts and geopolitical analysis being leveraged by funds, but rarely their sole source of alpha. I.e. such some bought Korea CDS back when all the tests were going down but tough to make this your only strategy. Many firms used human expert "assets," but have to be careful with MNPI. Never heard of anything like running your own "spy ring." If you want the closest thing where these types of ex intelligence assets and geopolitical analysis are used regularly as a portion of the investment process I would argue 1.) emerging market sovereign debt, 2.) commodities, maybe 3.) emerging market equities. Corporate related investments (equities, corporate debt) will care but more as a "filter out" rather than driver whereas look at some of the moves recently in Russian and Ukrainian macro related assets and types of funds i mentioned would be very involved in theses. The reason why the pure intelligence/geopolitics approach doesn't work is fundamentals matter- what would the foreign outflows from the Russian equity market be in case of sanctions? How big are international reserves? How much will the central bank intervene in the foreign exchange market? What are your oil price assumptions and how do they change the aforementioned? All would affect where you entered and exited trades with geopolitical catalysts in this example.
Thanks! That's generally what I've found, i.e., an activist fund may hire some ex-intelligence guys as consultants to gather background on the board/CEO/ etc. of some company that the activist fund is targeting, but the ex-intel guys aren't making the investment decisions.
Would global macro funds be a good place to look if one is interested in the intersection of investing/geopolitics/business?
Less so than before in my opinion given the liquidity focus and increasing quantitative focus. Though I’ll note not a global macro expert. My feeling is the days of Michael Marcus taking a huge bet on the Saudi Riyal on the basis on oil view are long gone and has given the way of rates RV. While geopolitical factors could have some impact on rates RV I’d argue other economic factors and associated modeling matter much more. As such id suggest the types of funds already mentioned
I have tapped on the insight of the best geopolitical analysts for work, but find their contribution usually marginal. A good macro/investment analyst should have the skill of a geopolitical analyst and more. Being one dimensional by being an economist, a trader, a quant or a political analyst isn't enough.
Eurasia group is pretty solid, and I know they wanted to start a macro hedge fund.
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