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Three Rock Capital: Is Ireland the best location for a global macro manager?

ireland-02User Contributed News – Ireland was once known as the land of saints and scholars and is famous for its poets, its writers and its magnificent landscapes. It’s less well known for its collection of hedge fund managers, but that’s something Three Rock Capital are looking to change. We don’t have the literary talents of Yeats or Heaney but when it comes to delivering excellent absolute returns within an institutional quality infrastructure we believe we can deliver a compelling offering.

Three Rock Capital is a discretionary global macro manager based in Dublin. We trade liquid exchange traded futures with a primary focus on foreign exchange. We also trade equity indices, interest rates and precious metals. We have an audited track record dating back to January 2009 with an annualised return of 8.9%. Our annual return has been positive every year from 2010 onwards, returning 8.1% in 2014 and 13.3% so far in 2015.

From a marketing perspective, Ireland is an ideal location, being close to European markets and as close to the large conglomeration of east coast United States investors as managers in Los Angeles. We aim to visit the US 6-8 times per annum and Europe monthly, and we mix our marketing trips between the hedge fund conferences (as we can get exposure to a greater cross-section of potential allocators that way) and direct investor meetings in all the main centres. In addition, we are close to the largest universe of hedge fund managers outside the US in London, a short flight away for these due diligence visits.

The broader hedge fund infrastructure within Ireland is impressive. The low corporate tax rate of 12.5% and an enlightened government approach to job creation ensure that a significant proportion of the world’s top hedge fund administrators have a foothold in Ireland. This directly benefits our business as there is a significant level of expertise present within Ireland, with large swathes of employees dedicated to the hedge fund industry by accounting and law firms. This was helpful during our application for authorisation from the Central Bank of Ireland. The Irish state owned business development agency, Enterprise Ireland, was also helpful during the embryonic stage of our business. The agency provides us with market access expertise in all our target markets.

More importantly, Ireland is home for the principals in the business. We all worked as traders for Bank of Ireland back in the 1990’s. Conor O’Mara (Investment Director) has been trading money for family and friends since 2000 and has an audited track record dating back to January 2009. Ciaran Kane (Managing Director) and Fergal Cox (Research Director) remained in the banking sphere, working with Barclays and Rabobank respectively. The ambition to set up an alternative investment business was realised when we set up Three Rock Capital in late 2012.

It’s certainly a competitive industry and we face similar challenges to all small business owners, but it’s the only industry for us and it has been incredibly fulfilling so far. We are happy to play the long game – our aim to be one of the world’s best global macro managers 10 years from now with an investor-centric approach and all our principles still intact. If we run our business consummately and deliver excellent risk adjusted returns, we can achieve that goal.

We feel that the current market environment is encouraging for Three Rock Capital given our specialism in FX.  We believe that the US Dollar is in a multi-year bull market, not unlike that seen in the early 1980’s or late 1990’s. The underlying drivers of this bull market are not short term in nature;

1) The United States is something of an oasis in an uncertain global economic environment with clear strategic advantages in technology, energy, demographics and economic flexibility over its competitors.

2) The European Central Bank and the Bank of Japan are engaging in concerted efforts to weaken their respective currencies.

3) A commodity bear market has lowered commodity prices and commodity currencies against the USD.

Three Rock Capital is well placed to take advantage of this backdrop having returned 30% for investors in the last year, including 23% from foreign exchange markets. We believe that our focus on FX, allied to our low correlation to equities and high calibre team, make Three Rock Capital an attractive proposition for any diversified portfolio.

 

Ciaran Kane, Managing Director, Three Rock Capital Management.

Ciaran.Kane@threerockcapital.com

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