The ex-Deutsche Bank VP running a hedge fund in Cornwall
When Alyx Wood was a child, family holidays were spent in Cornwall, the English promontory best known for its surfing, tin mining and stone circles. Now that he's 37 years old, Cornwall is his adoptive home. Wood lives in Helston, a town near Cornwall's southern tip. There, he is CIO of a hedge fund.
"We are a long short equity fund specializing in UK equities," says Wood of the Kernow Asset Management, the fund he founded with Ed Hugo, a former head of equity research at VSA Capital, in 2019. "We're also a contrarian fund. We're following an out of favour strategy in an out of favour market!"
Kernow has £100m in assets under management, and uses a small core team to manage them. The fund has an office in an old stable complex amidst the ancient woodlands and track ways of the 700-year-old Trelowarren Estate. It has two permanent employees in Cornwall, and 42 advisors and consultants on Zoom. Wood is mostly in Cornwall but comes in and out of London's Mayfair. He visits clients in Switzerland. "There's a flight from Newquay to Zurich and it's often reasonably busy," he says. "I think it's because there's a German TV series a bit like Poldark and people want to visit Cornwall as a result."
Despite being nearly 300 miles from London and working on an estate where people come for holidays, Wood isn't resting in Cornwall. "I've never worked so hard," he says. "We get one analyst a week calling and asking to come and work for us, but they usually want to do so for lifestyle reasons, and I don't want to hire people coming to Cornwall to slow down."
Kernow doesn't use traditional financial analysts, anyway. The fund is currently doubling its permanent headcount with the addition of two new staff in Cornwall: a Python coder ("You can get the best coder in Cornwall for £50k," says Wood), and an analyst with a business intelligence background. The latter is to conduct detailed investigations into the companies the fund is shorting. In the past, these have included WANdisco, the UK software company that falsified $15m in revenues, and whose shares fell 95%.
Kernow is an investor in Metro Bank, the British retail bank whose share price is down nearly 70% this year. This doesn't seem to have long term impacted returns, which Wood says have "materially outperformed" the index since inception.
Wood left Deutsche Bank in 2014. He moved to Cornwall in 2019 after some years elsewhere and at a family office. The landscape forms the backdrop to his thinking. “Cornwall is where I do my best thinking; it’s where I can focus and where everything becomes clear. That brutal clarity of thought is vital in decision-making,” he says on Kernow's Instagram account. His wife grows vegetables and they live simply. 300 miles from Mayfair, no one cares about markets, no one knows about hedge funds. "The hospital and Falmouth University are the top dogs. If you're not part of those you're no one here," says Wood.
He has no intention of going back to London. "I moved to the most beautiful place that I knew of," Wood says. He does intend to grow Kernow. Assets are being raised; staff are being added. Wood is passionate that this is the time to invest in UK equities: "There's a once in a generation trade. The market is massively underpriced. Hotel Chocolat was taken over for a 170% premium last week. You can buy a company and get a 20% yield."
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