Blood Money (9 page)

We distance ourselves from the usual long term investment advice, instead focusing on affluent people who are comfortable with risk-taking. The entrepreneurs, the people who aim far higher than the rank and file. And with hedge funds still profiting in this prolonged period of austerity we are looking to Kronos Capital Management and of course you, to be the main feature article for next week's edition. I want to pitch your company as one of the most successful institutions in the world of finance, with you as the incredible personality leading it forward.”

Although she is laying it on ‘excessively thick', he's unaware of her skilful manipulations. It's all music to his ears. Her flattery is like an exquisitely sensuous massage and he simply doesn't want it to end. He can almost see the glossy article already, telling the whole world just what an incredible success he is.

“Emma, I must say I am very impressed with your magazine's offering. I would be delighted to be featured in your publication. There are just two points that I'd like to make clear…(Alexis finds himself momentarily staring somewhere that he shouldn't, and then realising his manners he raises his eyes). Firstly I am unable to answer any questions on the specific strategies of our funds. It's an extremely competitive business, and none of us want to give away any secrets to our rivals. Secondly, the FSA restricts hedge funds from any form of advertising, whether that be in the form of websites or indeed via a magazine feature in The Speculator –I'm sure your editor knows how to pitch the article to avoid this complication. So long as we both understand this, let us begin. What would you like to ask first?”

She smiles a friendly smile and politely begins her questions. She throws out an easy one to get the ball rolling.

“It's hard for prospective speculators to hunt out hedge funds let alone pick out which one is best for them. Is it really so necessary that hedge funds have to operate in such a shroud of secrecy?”

“If you aren't an accredited investor, it will be tough for you to hear about a particular hedge fund in the first place because of the restrictions on advertising. My advice to anyone interested in making money from hedge funds is to register with one of the industry websites, such as Hedge Week or Hedge Fund Review. From there you will find some useful information and guidance on contacting a fund. In most cases you will need to qualify as an accredited investor before we would take your money. This is a legal requirement; -we have to ensure clients have sufficient money to invest. Prospective investors are obliged to fill out a lengthy questionnaire declaring details on your holdings, (stocks, properties and the like) and so long as you have sufficient net-worth then you will qualify.”

Coquettishly, head slightly on one side she slowly winds a ringlet of her soft brown hair around her index finger. “So what are the typical net-worth requirements to qualify a person as an accredited investor?”

“A typical minimum hedge fund investment is between £300,000 and £1.5 million. If that's the sort of money you're happy to put up then here's how to determine if you make the grade for a hedge fund. You and your spouse will need a combined net worth of £1 million -not too high a barrier considering this can include the value of your home. You'll also need an individual income of £150,000 or a joint income of £200,000. Clearly this rules out some people, but I think it also makes it a very achievable way for most individuals out there to speculate successfully.”

“Are there any exceptions to getting in to hedge funds without becoming an accredited investor?”

“A fund manager is allowed to make a very limited number of exceptions, for example very close friends that I can personally vouch for, but I cannot stress enough that this is very much an exception to the rule.” Alexis fights the urge to wildly daydream about what he'd like to do to the goddess with killer-curves sitting in front of him.

Staying professional, he continues with his spiel, “I'd also like to stress at this point that anyone new to hedge funds should seek legal and independent financial advice to make sure they are investing in a solid fund.”

“And there can't be many funds as solid as Kronos…. What is the background to your company and its funds?”

‘At last…she's getting to the important bit where she wants to know all about me.'

He can't believe he's been so patient with Emma's elementary school questions so far. If this were any normal muppet he'd of kicked them down three flights of stairs by now. His only reason to have remained so tolerant with this journalist so far is that she's so incredibly hot.

“Kronos Capital Management was started in 1995 when I was thirty. It now has more than £15 billion in assets under management. We have a relatively flat organizational structure, with 4 senior portfolio managers each having 8 junior portfolio managers reporting in to them. We utilise computerised trading for much of the time, as trading in many thousands of different stocks is just too much for the human brain to handle. A few years ago I started employing some specialists to develop complex trading algorithms, back-testing them with historical data. Once we saw promising results we ran pilot trades. Even to this day much of the work we do here is to explore new viable trading strategies. We implement a promising selection. Build-up the profitable ones, wind-down the poor performing ones. It's a process of continuous evolution.”

“And now bring me up to date. Why are the levels of success so great at Kronos Capital Management? What makes you the industry leader?”

“It's all down to the calibre of people I employ and the technology that I put at their disposal. About half of my staff are here to feed KATA with analysis, data and ideas. Only those ideas that will give us an edge are incorporated. We also use KATA to set off alerts for the portfolio managers to check on, and to generate further trading pattern ideas. Finally, I give my teams' access to the very best information that money can buy. They've got instant access to prices, all the intraday graphs and balance sheets they could wish for as well as dealers on direct lines.”

“You talk very affectionately about KATA. What exactly does it stand for?”

“Sorry, I should have explained, it stands for Kronos Algorithmic Trading Advisor. And yes, it is like a child to me. A child that always gets straight ‘A's' at school. A child that I am very, very proud of. Did you know that quantitive trading now accounts for nearly one-third of the trading volume in the United States?”

Most people in her position would react poorly to being spoken to so condescending, but she smiles demurely whilst thinking to herself: ‘What a fat, sweaty, patronising bore! -Stay professional Emma, stay professional and keep smiling.'

“Really, is it that much?” her fine eyebrows lift in a forced ‘I am surprised' expression. “And what about your fees, do you take advantage and charge more than the average for such fantastic fund performance?”

“Our fund performance is very good indeed, of that there's no doubt. We seek alpha-generating opportunities wherever we can find them. Since 2006 the company's £8 billion Multiplicity Fund averaged 35% annual returns after fees, making it one of the most successful hedge funds in the world. Oh, and to answer your question, despite our phenomenal success Kronos still charges a relatively modest management fee of 2% and a profit participation fee of 20%.”

Slowly uncrossing and re-crossing her Bambi-like legs for the umpteenth time (it's all part of her subliminal act), she continues to the next item which she knows he'll love. “And what qualities would you say it takes to become a successful fund manager?”

“Running a hedge fund is fiercely competitive. Being good at it takes brains, dedication, and above all, passion.” As soon as he's said it, he is thinking that even for a Greek perhaps overemphasized the last word. English girls probably prefer their flirting to be a bit more subtle compared to what a Mediterranean red-blooded male is used to. But he can read her smile only too well and it's clear that she's forming a deep attraction to him.

“It's a job that relies on being one step ahead, so you need to be very academic, but if it were just about pure intellect we'd simply get a computer to do it all. I'd also say that it takes nerves of steel and a great deal of confidence in your own abilities.”

“That's very revealing…Now let me think what else do I want from you?” She plays with her bottom lip using an extended index finger, pulling it down into a pout whilst raising her big dark eyes upwards in search of inspiration.

The fund manager watches her every move and swallows hard. ‘Christ' thinks Alexis, ‘if she gets any hotter I'm going to need oven gloves to touch her!'

Her expression changes back to her usual feline smile. She has thought of the next question, “Ah, yes Alexis, what are the biggest responsibilities you have as a hedge fund manager?”

The reality is that his responsibilities are only to himself. And that responsibility is to amass as much personal wealth as quickly as possible, by whatever means necessary. But that will not do as an answer, so he thinks quickly and comes up with a more ‘publicly acceptable' response.

“I am accountable for physically managing my client's money. It isn't the type of role that you can get into quickly. Speculators need to see someone building up an impressive track record before they are willing to entrust you with large amounts of cash. I think it took me at least three years before I had built-up enough credibility to really get Kronos flying. You see, Emma, fund management is the pinnacle of the finance industry. After all, I'm dealing with unimaginable sums of money belonging to some very powerful people. “

Miss Barnfield nods understandingly at his egotistical words of wisdom before she gets onto her next item. “These are difficult times, what do you think the future has in store for hedge funds?”

“Hedge fund management is a precarious business at the best of times, and now is not the best of times. Despite shrinking investment, the hedge fund industry is alive and kicking – and adapting. I think in a short period of time the industry will split into two sectors. Small boutique funds mainly aimed at high-net-worth individuals and larger mainstream funds appealing primarily to institutions. Being small is a limitation in itself, but a small fund is more liquid, more nimble and can beat the mainstream speculators. The larger funds will need to tie-in the institutions that they serve and offer more long term performance promises. They will prove more stable but will ultimately under-perform the smaller funds. Any fund trying to have a foot in both camps will struggle to satisfy the different needs of both types of client.”

Emma has been playing with a high heeled shoe on the extended toes of her raised foot ever since she last crossed her legs. Letting it fall onto the lush carpet, she bends forward to re-instate it, purposefully affording Alexis with a different view to stare at. He catches a glimpse of her white lacy bra and ogles at the peachy mounds of soft flesh that it's struggling to contain. Slowly sitting upright once more, she smiles. “Sorry about that, I can be a bit clumsy at times.”

Alexis can't remember having been so polite to anyone for so long. ‘I'm really putting the effort in for this pretty little thing; I didn't know I could be quite so charming'. Taking a sip of mineral water to douse the continuing dryness in his mouth he says in the gentlest of tones. “You're quite alright my dear…shall we continue?”

“Of course. Umm…-And how do you see Kronos evolving?”

“Our loyalties most definitely lie with the high net-worth individuals that we serve. This office shall stay at about its present turnover, I think it's reached its optimum size, but you can expect us to open an office in Europe and perhaps given time in the Orient.”

“Any exclusive comment on where and when you will be expanding into Europe?”

“Emma, I wouldn't like to discuss that presently, but perhaps the next time we meet I will be at liberty to talk about it further.”

“Right, ok, we'll leave that topic until next time. Well I must say you've been very kind to me this morning, I appreciate it so much Alexis. You've been honest, and helpful and sweet. There is just one more thing you must do for me…” Alexis gulps for air. Suddenly his dry mouth has started salivating like a starving dog staring at a pan-full of bacon.

“I need some photos!” she squeals in delight. Alexis curses, he'd been sure she was about to suggest having a drink or a meal in his company, maybe more? But still, a photo opportunity can't be dismissed, especially for a man as successful as himself, so he politely responds “Where would you like me Emma?”

“Well, one in your office would be good. A view of the City through that arched window would be marvellous.” She poses him behind his desk, looking into the distance though his office windowpane. He sucks in his stomach and stands upright with his shoulders back. He can't resist thinking positive reinforcing thoughts about his lofty self image. ‘If I say so myself, this'll make a magnificent profile shot, I'm going to look so good in this stupid magazine!'

Emma changes his position several times, concentrating hard to portray the unpromising subject matter as best she can, taking sufficient shots until she's happy that the lighting and the background/foreground compositions are acceptable.

“You know what Alexis? -that's great for the front cover but I also need something a little bit different for the centre page spread. Now, what could we do…?” She pauses and considers the options, “-I've got it!” she smiles. The answer seems so obvious. “Of course, -you with your baby! I simply must have a picture of you with your darling KATA computer! It will bring the piece to life!”

Normally, such a suggestion would be dismissed out of hand.

The Cray resides at the very centre of his financial empire, the thumping heartbeat that he protects most dear. No one but himself is allowed down into the basement. But this sweet angel? This innocent pretty darling? He has to give her what she wants. He so wants to make her smile again and is desperate for her to stay with him for as long as possible.