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King Neptune

Robin Geffen founded Neptune in 2002 as what he calls a boutique with a difference – running with a team environment rather than focusing on a few star managers.

Back in the early years of the decade, several people were setting up hedge funds but Geffen saw a gap in the market for a long-only house along such integrated lines.

His own career started back in 1983, with stints at firms including Eagle Star and Scottish Equitable before landing at institutional firm Orbitex in 1996. Along with four colleagues, he launched Neptune six years later with just £12m in asset. The business has grown to 62 staff and £2.7bn under management.

Staff own around 80 per cent of the business, with the remaining fifth in the hands of long-term private equity and venture capital investors.

At its core, the firm’s investment process forces all the fund managers to continue doing analyst research, focusing on global sectors rather than countries.

Geffen said he has always struggled to understand why managers are quick to give up research as this is the background to any investment decision. This approach is reflected in Neptune’s remuneration structure, with a third share each for performance, profitability and contribution to teamwork.

According to the group, its focus on research has developed a fairly unique culture of growing in-house manager talent rather than poaching staff from other firms. This is another feature marking it out from boutique competitors, with many looking to attract so-called stars from larger houses.

Neptune has been involved in few comings and goings over the years, with Jeremy Smith from Schroders a rare external recruit in 2006.

Barry Norris and Oliver Russ were high-profile departures in 2005 to set up their own Argonaut boutique. But vitally, performance on the former’s European vehicle did not fall off when current manager Rob Burnett took over.

As the company has grown, there are now two people covering each sector, with three on the currently troubled financial area.

Neptune also has two in-house economists so the entire decision-making process is under the firm’s one Hammersmith roof. Geffen compares this to larger firms where managers and analysts are split across several locations, which he believes they do at their own peril.

Another key aspect of the group’s process is running focused portfolios of 40-60 holdings, getting the benefit of good stockpicking and avoiding diversification for its own sake.

In terms of product range, the group has avoided the typical flagship fund approach, aiming instead to achieve top performance right across the board.

It currently boasts sector-topping equity vehicles in the US, Europe and Japan, as well as Geffen’s own UK income, Russia and various global and managed offerings.

His balanced fund brought over from Orbitex now offers a 10-year track record.

Neptune has also favoured a policy of soft-launching products and giving a manager time to build a track record rather than retail pushes at the top of a particular market.

This approach has seen China and India products introduced in recent years as well as the group’s debut fixed-interest offering but these have not been pushed so far.

On the business side, Geffen and team have run Neptune as a relatively conservative operation, resisting the temptation to leverage up in better times.

It has focused instead on organic expansion, doubling assets under management every year until 2008, when the savage bear market cut this growth to 20 per cent.

This strong balance sheet now leaves the firm in a position to consider acquisitions and it was among those touted as a potential buyer of New Star earlier this year.

Geffen said the company is able to have a look at opportunities that arise and prices are currently much more favourable than in recent years.

Looking at the market, he expects more pain to come in the financial sector and feels that people may have underestimated the wider impact of issues in banks, insurers and property companies.

He is relatively positive on the general Government willingness to address these issues across the world although is not expecting plain sailing on this front.

Elsewhere, he also highlights the plight of British industry as financial issues creep into the real world, with the Government clearly not about to bail out these companies as it has the banks.


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