Hedge Magazine, March 2019. Original article p30-32.
Interview with Doc Horn, Head of Total Return Equities at Pictet Asset Management
Doc Horn, an American in London, loves it here. “In the States, not even in New York, you don’t have the depth of history and cultural diversity of London. It’s so different than anything you can find in any city in the States,” he says – Horn has been living here for seven out of the past nine years, returning to London in the summer of 2017 when the opportunity arose to join Pictet Asset Management as Head of Total Return Equities.
We’ve met in Pictet’s offices in the City, enjoying the view from high up on a cold and sunny winter day. Horn looks sharp in a dark blue suit and green patterned tie, coming across as straight up professional on the topic of work yet open and cheery on other subjects; when they came back to London, he tells me in his mild-mannered way, they lived opposite Hugh Grant in Notting Hill for a time – the ultimate American in London experience.
Horn’s work at Pictet is very much one of being the boss, overseeing total return equity strategies as well as ten small global teams working on different approaches. “What I enjoy most are the conversations I get to have with all these bright minds, and how I get to help them formulate new investment ideas and help them understand risk in their broader portfolio. It’s an incredible opportunity, to be that connector.”
For investors, the choice is to either access the Pictet multi-strategy diversified alpha fund – a “hyper-diversified” fund of 17 strategies with low to no correlation to each other. Or they can pick an individual strategy or region and invest directly: “The idea would be to have numerous differentiated strategies that are focused on either a unique universe of coverage, or style or region of investing.” Three of the single-strategy funds are in Asia – Horn cites the China long-short fund as one of the most compelling strategies in the mix right now. Part of Horn’s job is to identify new strategies – most recently he brought in a specialist in merger arbitrage – that can be added to the mix. They take a long time to hire their managers, says Horn – when they have chosen someone, they invest in them and ensure they have the support of Pictet’s resources. “Then after a time, if we think it’s a viable product that investors would like, and if there’s still capacity or left-over room for more money to come in, then we’ll launch that as a stand-alone fund for investors to access directly.”
Sometimes Pictet will bring in fully formed teams who might have been working together for years, and the ideal approach may well be to pretty much leave them alone. “They know best how their strategy needs to be managed, and the less meddling that we do, the less chance of style-drift,” says Horn, who seems to be relatively hands-off with the process. “We spend a lot of time communicating with the teams, trying to understand the exposures that they have on their positioning, the way they’re thinking about the markets and about risk. We use that to help inform other teams [in the group] and find commonality in exposures or in themes that they’re playing, and connect different teams if necessary.”
Horn says the ideal outcome is when the teams actively work together. “I think that’s a key differentiation from many of our other hedge fund peers. We see collaboration as key to how these teams operate – the whole is greater than sum of its parts,” says Horn. “The knowledge base that exists from a global team [means we have] the ability to share a wealth of data and knowledge, and that is really beneficial to all our investors.”
Horn (39) comes from a small mountain town in Colorado. “I grew up raising llamas” – yes it was unusual, and no, they weren’t for any purpose other than fun. “We had several animals, including a few llamas which I was mostly responsible for.” Horn estimates being trusted with this task from about the age of five. “They were a nightmare when they got out of the stable because they don’t like to come back. You’d get the neighbourhood together for a llama search party,” Horn laughs. He left for New Orleans at 18, studying business at Tulane University. He was “fascinated” by finance: “It just made sense to me. But I’d be lying if I said I was getting the Wall Street Journal delivered to my house at the age of fourteen.” The moment of conviction came at university when he took part in the Burkenroad Reports, a securities analysis programme where students became equity research analysts for a semester. “You’d meet with the company management and you do a full buy-sell-hold report. I had a little oil field services company called Trico Marine. … That was the thing that helped me get into equity research.”
Horn moved to New York after school and joined Fulcrum Global Partners. It was an interesting first job: “My first company meeting was with Ken Lay, the Enron CEO, on the same day the Wall Street Journal published the first article about potential accounting issues within Enron. That meeting was a fascinating entrée into the business. Ken was very smooth. He was an incredible speaker and presenter, probably not a fantastic manager in retrospect.” Asked how the experience shaped his view of the world, Horn says it’s imbibed a certain skepticism. Fulcrum continued to tote Enron as as a Buy recommendation after that day: “I was very junior at the time. As the stock dropped day after day, and more bad news came out, we failed to adapt our opinion on Enron to reflect the new facts. We allowed emotions and stubbornness to guide our rating, and it resulted in a poor recommendation to our clients.” It became an important life lesson: “You have to be pragmatic, and you have to cut your losses. Probably one of the things that has helped me succeed as a portfolio manager, and a manger of team, is a real willingness to look at both sides of the argument, and be willing to change my view.”
Before joining Pictet in 2017, Horn spent almost 12 years at UBS O’Connor, which provided exposure to a range of sectors and later, a variety of geographies including his first stint in London as head of the European team. “My career hasn’t been that long, but the cycles have been more compressed. Experiencing 2001, living through 2008, being in Europe during 2011, seeing the many crises and bubbles that have formed along the way. The one commonality in what I’ve been doing is risk awareness, and taking a very market-neutral approach.”
It can be easy to become a superstar for two years, but then flame out and never recover: “You can have five phenomenal years and one terrible year, and everybody will leave you on the side of the road.” Horn describes himself as a “smart risk-taker” who minimises the amount of volatility he’ll allow in his portfolios. Asked if that’s a controversial position, Horn says it’s more rewarded now in the post-2008 world: “Many investors have gravitated towards a much more risk-conscientious mindset in the past decade, and you see fewer hedge-fund cowboys. Our investors are the same way. That’s the mindset that we cater towards.”
Live to fight another day, in other words. Horn and his wife Lauren have four children aged between two and seven, which takes care of the question of what he does outside of work. He likes going out to eat though: “My favourite restaurant in London right now is a small Italian place, it’s looks like a gelato store front in Camden. But when you go in it’s a phenomenal restaurant, a BYOB place with no charm but outstanding food. It’s called Anima e Cuore.” It’s got increasingly hard to get a table there, says Horn, but he’s got a trick for that: “When you have four kids at home, you’re happy eating at 5.30pm when no one else wants a table.”
One last thing. Why do they call him Doc? His full name is Stanford Everett Zachariah Helms Horn. “My dad thought it would be a funny name for a child to have in nursery,” says Horn – it’s what he’s been called since he was a kid. Funnily enough, his brother Cash is the one who became a doctor, and Doc is in the “cash” business. “My parents got the right industries, just the wrong way around,” he laughs.