“Chahine Capital’s algorithms revisit each month the investment case of more than 1,500 european stocks,” states Charles Lacroix, CEO of Chahine Capital. He tells us about the technology that supports the company activity.
Can you present your company in a few words?
Chahine Capital is an independent asset manager based in Luxembourg and a pioneer in quantitative long-only equity “Momentum” strategies. The Digital Funds SICAV, which has been launched in 1998, has been among the best performers within the industry for more than 23 years, delivering a significant and persistent alpha. The investment team (Portfolio Managers and Researchers) is composed of scientific engineers, exploiting large financial data sets to identify robust and persistent Momentum signals. Our models aim at identifying, at an early stage, what we call “Star” companies. These are stocks with the capacity to surprise positively and repeatedly market participants. The essence of our approach is to capture, year after year, the few exceptional investment cases that our broad European and US investment universes offer. We are currently managing circa EUR 1.7bn and our team is composed of 19 professionals based in Luxembourg, Paris, Frankfort and Geneva.
You just mentioned that you are an European pioneers in quantitative investment.
But could you describe what quantitative investment is?
Based on the research of renowned mathematicians and economists such as Louis Bachelier or Harry Markowitz, quantitative investment consists in collecting a very large data set on very different types of financial assets. Based on algorithmic models, it is an agnostic, disciplined and rule-based investment approach which avoids any human bias (geography, styles, sectors, etc). For instance, Chahine Capital’s algorithms revisit each month the investment case of more than 1,500 european stocks which is obviously materially impossible to do for a human brain. This leads to highly diversified portfolios (130-170 stocks picked out of very broad universe) in order to mitigate risks. However, as any equity investment strategy, ours are volatile and their recommended investment period is at least 5 years.
Can you now describe your investment process?
Chahine Capital’s investment process is based on a quantitative stock picking model aiming at capturing the stock “momentum” factor, i.e. the stock price trends, buying those benefitting from a positive momentum (their price going up for a certain period of time) and keeping aside of those exhibiting a negative one. As trend catchers, our models proved historically their ability to adapt to different market conditions and to outperform the main equity indexes over the long-term. Based on an on-going proprietary research, Chahine Capital’s investment process has been improved over time. A good illustration of this is the introduction of artificial intelligence-based models in 2019 which has been so far a great addition. At last, our investment process includes an ESG policy since 2018 and most of our funds have been granted the LuxFlag ESG label in 2019.
“Our models proved historically their ability to adapt to different market conditions”