What WEPRO Brings to the Table

To effectively manage funds, all managers need to have certain attributes to be successful. In investment management, there are always going to be different opinions on how to run a portfolio and different strategies, and there are various ways to successfully make money. Nevertheless, it is the traits of money managers that best determine how well they will do in the markets.

Here are the top traits that money managers need and how we strive to fit this profile at Wepro Investments.

  • Work Ethic

    Investment management is our entire life. This is because we enjoy it, and having joy in what you do breeds a desire to work hard at it. It is how we make our living and we have over 99% of our liquid net worth wrapped up into the fund, perfectly aligning our incentives with yours.

  • The aspiration and dedication to be the best

    To do well in investment management, particularly as it pertains to generating alpha – or value above what you obtain through passive indexing – you have to be inherently competitive. There is no other option, given the market is the most competitive game out there.

  • Mental flexibility, and thorough and exceptional research abilities

    To do well in the markets you need to have opinions, and specifically opinions that deviate from the consensus because the consensus is already baked into the price. At the same time, said opinions must not be dogmatic or inflexible. Markets change and opinions must be loosely held to avoid intellectual calcification. Intransigence leads to an inability to adapt. We have opinions on the market, but we are not married to them. We simply have conviction in them until the evidence shows otherwise.

    More on our current research and approach to the markets can be found here.

  • Being ahead of the crowd

    Part of being right simply means being ahead of everyone else in anticipating things before they happen. Asset prices move based on expectations for the future. We look at futures curves and risk premiums currently priced into markets and determine whether these embedded assumptions are rational or not. At the same time, if we are wrong, we cut positions immediately.

  • Exceptional communication skills

    We pride ourselves on transparency to keep clients up-to-date with all developments within the portfolio. We can always be contacted any time for updates, to discuss current events, or matters related to your account.

  • Ability to judiciously manage risk

    Good ideas are those that are asymmetric in their risk-to-reward profiles. This sometimes means taking a trade with a favourable skew even if the probability of the potential outcome isn’t particularly high. It is sometimes beneficial to take a small loss if the opportunity for a large gain is available and the expected value of the trade is positive overall.

    At the same time, it’s important to understand what makes up a poor risk-to-reward trade. Is it worth buying a high-flying asset at all-time highs based on the sentiment surrounding it, or does that simply mean that it’s become that much more expensive, with risk asymmetrically skewed down?

  • Being open-minded and recognizing the difference between logical opinions and ideological ones

    Our mode of thinking isn’t “we’re right” – it’s “how do we know we’re right?” Most traders, when they lose a trade they think of themselves as merely “unlucky”. When they win a trade, they tend to believe it’s a pure function of their own sagacity and expertise. Of course, this isn’t very sensible thinking. Denying mistakes or blaming them on external factors doesn’t help in learning from them.

  • Not being on an island

    For one, to understand what’s going on in financial markets, you have to get a sense of who are the buyers and who are the sellers. You look at what’s priced into the market currently and how rational those expectations are. You can lean on the opinions of others, particularly those who are smart, and generally informed and sophisticated, and look at it from their perspective to determine whether their judgments are credible.

  • Being willing to increase position size when necessary

    If a market is down but the investment thesis and fundamentals haven’t materially changed, it can very worthwhile to add to a position.

    It is a common mistake to view appreciating markets as “good investments”. This can be true, but it often means they are becoming more expensive investments. Likewise, when markets are going down, it would be a mistake to necessarily view them as “bad investments”. Sometimes that means they are getting cheaper.

    It’s similar to the way you might view a common consumer good. When a couch you fancy climbs in price, you don’t think what an increasingly fantastic item it is; you think that’s it’s becoming more expensive and less appealing of a prospective purchase. Likewise, when that couch goes on sale you don’t think that it must be a terrible piece of furniture; you think that it’s becoming more attractive to buy.

    Buying quality assets at cheap prices is the best way to make money. Really making money involves buying assets when conditions are seemingly the most ominous, and these types of opportunities inherently come around infrequently.

  • Admitting to mistakes

    People would learn a lot from their mistakes if they weren’t so busy denying them. There’s often a big gap between what is true and what people want to be true because of the intellectual simplicity of abiding by ideological persuasions. It’s important to be mindful of this. Stubbornness, ego, and inability to adapt leads negative outcomes.

  • Having a contrarian or skeptical view

    We explained this in depth here in that taking bold but logical trades and being right is how you achieve outsized returns that add value. To do this, you have to take some risk, but smart risk.

  • Focusing on absolute returns

    The profit-and-loss number is less important than the actual percentage returns you are generating for clients. Too many traders look at their P/L figure without actually considering what that means in terms of efficiency.

    For example, if you’ve made £25 million in the past year, this is really nothing if you’re managing £1 billion. You can get that return investing in a US Treasury bond that barely moves and go fishing the entire year. It’s not about the monetary figure in terms of earnings, it’s about how efficiently you’re actually managing that capital.

  • Identifying where you have an advantage in the market and making the most of it

    We compete best by being independent thinkers who are willing to prudently go against the consensus in order to add value. Markets are influenced by all sorts of news and opinions. A lot of this constant information stream is inaccurate because there are agendas and biases behind them.

  • Producing a sufficient number of quality trade ideas

    In a given year, we might only see 2-4 things that we really like, and another 5-15 things that we also have conviction on, but not to the same degree.

    We bet more on the things that we really like, but also have broader diversification within the portfolio as well. This improves our reward-to-risk ratio and spreads our bets so we aren’t dependent on the outcome of a small set of things going right.

What our Client Says