Chris Cullin is best known for turning a niche business in countries granting citizenship to wealthy foreigners into a multi-billion dollar industry, earning him the nickname “Passport King.”
At the same time, he has quietly made a fortune side-betting on quantitative trading.
Karin, 51, is the co-founder of Alnova Capital, an investment firm focused on systematic trading strategies, which made about 2,000% of its profits by June since its inception in the early 2000s, according to documents obtained by Bloomberg.
The Zug, Switzerland-based company shares few details, but bet on energy prices during the pandemic and a Reddit-fuelled GameStop trading frenzy that helped it grow its current assets under management to more than $250 million.
Recent market volatility is driving some investors away lean more As for external asset managers, Karin, who holds at least $100 million in Arnova, now focuses on direct control of his wealth.
“I always thought the only way to keep wealth was to make more,” Karin, chairman of investment citizenship advisory firm Henley & Partners, said in a Zoom interview. “One of the best strategies is to keep chasing opportunities.”
When he joined Henley & Partners in the late 1990s, it was an obscure wealth management and immigration consultancy firm. Since then, we’ve helped dozens of governments raise nearly $12 billion in direct investment through citizenship and residency programs, while advising thousands of millionaires on where and how to buy a handy passport.
The company regularly issues index Passports from Asian and European countries top the list in the latest edition, released Tuesday.
Through Alnova, more and more wealthy people are gaining more control over their money, Kalin said, disrupting the common way private banks and other investment firms cater to the world’s ultra-rich.
Some of the biggest billionaire-capital firms are also looking to take in outside funding as they expand and refine their businesses. Swiss billionaire Ernesto Bertarelli’s investment group last year sought to raise more than $1 billion for its private equity and hedge fund divisions, while David Bonderman’s family office was seeking a similar move.
Arnova is also open. While the firm still focuses primarily on funding for a minority group of wealthy families and individuals, including Kalin, it has launched two fund-like products in the past two years to give outside investors exposure to Alnova’s unique strategy. This year it launched its third venture, targeting contrarian betting outside of the usual systematic trading strategies.
Karin founded the venture that became Arnova in 2003 with longtime friend Pendrofgren, a native of Sweden who previously created computer software for algorithmic trading strategies.
Karin initially put in less than $1 million, but he and Lofgren, 47, the company’s chief investment officer, raised more over the years. The pair aims to capitalize on the market’s over-optimism or pessimism and has been betting more outside of systematic strategies in recent years.
These include betting big on fossil fuel companies when oil prices turned negative during the pandemic, and betting on South Korean e-commerce giant Coupang when its shares fell last year on growth concerns.
It also shorted GameStop in 2021 after a slew of traders on Reddit pushed the U.S. video game retailer’s stock to all-time highs. Alnova’s algorithm showed that position losses should be cut, but the losses were relatively small due to stock volatility. But the two companies subverted their traditional trading strategy and ended up making what Mr. Cullin called “a decent profit” amid falling stock prices.
“We decided to hold out,” he said. “But it hasn’t all been smooth sailing.”
Karin grew up near Zurich and trained as a banker before joining privately held Henley & Partners, which does not disclose its financials.
The tall, runner-like physique made his name by compiling a nearly 760-page guide to doing business in Switzerland before revolutionizing the investment citizenship industry. The book is still in the Swiss embassy.
He is also the founder of the Swiss health consulting firm SIP Medical Family Office and has a global real estate portfolio. Karin’s Arnova funds, which charge only a performance fee, make up most of the current portion of his assets. He refused to discuss the value of other assets.
Karin and Lofgren are now seeing divergent valuations of oil producers in Latin American countries such as Brazil, which have recently elected left-wing political leaders, as well as tanker lines listed on small stock exchanges.
Karin and Lofgren said they knew the family office was using Arnova money, but didn’t know the exact number of outside investors. That’s because they outsource as many administrative roles as possible to banks and brokerage firms so they can focus on making money.
“We don’t want to hire a lot of staff and deal with every little detail,” Karin said. “We just want to focus on investing.”