Protect capital against market corrections

Protect capital against market corrections

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The SME now manages nearly $200 million in assets for wealthy clients and pension funds.

An eventful launch

Launching a business in the midst of a pandemic and in turbulent markets has not been easy, says Mathieu Boisvert. “We spent a lot of money out of our pocket without knowing how much money we were going to manage, but the most difficult thing was to put in place the compliance mechanisms, because the institutional market is very demanding in this regard. »

In September 2021, the partners set out to find a major investor who could inject a significant sum into the company. They knocked on the doors of pension funds in the United States, Ontario and Quebec.

A first investment of 100 million dollars (M$) from a large Canadian pension fund based in Quebec materialized last December. Private clients and another institutional investor were added, so that in January 2022, Bastion launched its first product, the BAM action Long Short fund, a strategy ” long shorts (L/S) on US and Canadian equities, with $160m under management.

An unexpected twist

When the partners left their former employer in March 2021 to go into business, they had no idea of ​​the turn the economy would take, with a historic surge in inflation and a sharp rise in interest rates. interest.

“We are faced with a difficult market, but our approach long shorts allows us to better approach this period, as it becomes more and more difficult for investors to earn money from their investments. Having such an approach is a great advantage when there are market corrections,” he believes.

Mathieu Boisvert considers that clients underestimate the importance of protecting their capital during stock market corrections. ” The approach long shorts mitigates losses and protects capital, so you can continue to enjoy compound returns,” he says.

Beat the clues

Bastion’s strategy is to beat market indices over a full cycle, including corrections. When the market is down, the firm takes the opportunity to trade small and mid-cap US stocks, “because this market is less followed by investors,” says Mathieu Boisvert.

As of June, the performance of the BAM equity Long Short fund was -0.2% net of all fees, while US equity indices were down -20% to -29% (-20, 0% for the S&P500, -23.5% for the Russell2000 and 29.2% for the Nasdaq), mentions the leader. He specifies that the Russell2000 index is the most representative for his strategy.

As of July 28, the fund was up around +1.5% for the year while the Russell2000 index was down around -18.4%, the S&P500 -16.5% and the Nasdaq by -24.2%.

Well-established values

Before going into business, the associates took the time to define the fundamental values ​​with which they wish to work. The first is excellence. Quality is another value on which they do not compromise. “We believe in quality more than quantity. We don’t want to raise assets at all costs with armies of sellers,” says the CEO of Bastion.

Associates also value integrity and dedication. “We work very hard because we are passionate about the stock markets. We want to serve people who are as passionate as us and who are eager to learn. »

They also want to give back part of the income generated by their activities to the community, by supporting charities, in the form of donations or volunteering.

They also want to have a positive impact on the Montreal financial community by recruiting talent from Quebec universities, underlines Mathieu Boisvert.

Alternative strategies and ESG

The CEO eventually expects to see a U-shaped rather than a V-shaped rebound, unlike exits from previous recessions. “We are heading for more difficult times, but the market is already taking this into account in the price of securities. »

The strategies long shorts are useful, according to him, to take advantage of market rebounds and are not more risky than other alternative approaches. “With the right risk parameters, they should be categorized as less risky than they currently are by regulators. »

Faced with environmental, societal and governance (ESG) criteria, the CEO of Bastion is mixed. “We take these criteria into account in our analysis. However, ESG falls into a gray area, as definitions of the criteria vary widely among managers. »

Bastion intends to grow by diversifying its clientele, particularly internationally. The firm plans to put other funds on the market, but not to the detriment of the main product, insists the CEO of the firm, which was recently selected by the Quebec Emerging Managers Program (PGEQ) for a strategy mandate alternative.

“We will remain active in alternative strategies, as we believe that returns will be more difficult to obtain in the coming years and that investors will need innovative solutions to diversify their portfolios. »

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