Why Choose Directional Alpha?
We are a Consultancy that mixes the discipline of actuarial with the awareness of a hedge fund. We can help you think through what is likely to happen over the next few years, so that you can react appropriately. We focus on your fiduciary duty by undertaking a thorough and deep hands-on involvement in the issues at hand since inception. We are by your side.
What are Examples of Your Analysis and Insights?
- Overview of World-Macro dynamics, where it is at, the next crisis and what it will mean for your portfolio and balance sheet.
- How to improve margins despite the constraints present via unconventional approaches.
- Modeling scenarios and trade-off analysis based on unconventional World-Macro approaches to help you to reassess macro-risk.
- Suggested investment approaches to overcome the next economic crisis and hedge against the silent Systemic Risk build-up process.
- Given that the point of a crisis is loss allocation, there is a limited amount of destination space and none at an acceptable price when everybody need them at the same time.
- Add-ons to consider in the Corporate Risk Framework and Investment Policies, such as Systemic Risk drivers in order to provide a better view of macro developments to take advantage of opportunities that arise.
- The outlook for interest rates back-tested against unconventional macro-risk drivers.
- Unconventional Risk Assessment given the structural, political, and corporate factors determining the individual decisions across markets, asset classes, and geographies that comprise the financial system; by prioritizing in-depth analysis into balance sheet priority risk detection/response, markets’ inability to price tail risk, business opportunities beyond market Groupthink, alternatives to bond investment, early warnings signals, and high-risk asset diagnosis given market uncertainties.
- Suitable hedges, timing, and re-allocation assessments under unconventional phased-settings. Re-assessment of tail and volatility risk hedging and liquidity risks.
- Tactical investment analysis, Inverse/Reverse engineering, and allocation scenarios in compliance with regulations.
- Long-term plan re-assessment analysis based on tactical hedges in different time frames.
Our Story: … a Long Walk
Directional Alpha started by focusing exclusively on tail risk and volatility trading strategies after the 2008 crisis. Before that, we already foresaw that crisis coming while working at other organizations (World Bank Group and Swiss Re). We were exposed to market crises such as the “Tequila” crisis, “Tigers” crisis, LATAM countries’ crises, the dot-com crisis, geopolitical crisis, tail events such as 2008 crisis, and other events of high volatility such as key Asian markets volatility events and Polarized Elections results.
Given such exposures and our continued work in finance, we have developed complementary skills by mastering traditional methods, and then subsequently unconventional methods in finance, world macroeconomics, investments, markets, volatility, tail risk, and systemic risk.
We re-launched Directional Alpha in 2017 with complimentary skillsets and a mix of insurance-macro and hedge fund global-macro investment skills. We believe that our diverse backgrounds and experience are our great Assets. We have solid experience over a wide range of geographies (US, EU, Latin America, Asia, Middle East, and Eastern Europe). Our understanding of cultures, doing businesses, finance, investments, and politics across many languages is high level. We have extensive experience in World-Macro issues such as financial crises, tail risk, modeling weaknesses, G-20, Financial Stability Board – FSB issues, Insurance & Financial Regulations, Pensions, Hedge Funds, Asset Management, Alternative Investments, Regulations (e.g. Solvency, Basel), Investment Management, Fundraising, Investor Psychology, Trading, Corporate Finance, Journalism, and Risk Management. In a nutshell, we have developed a thorough understanding of the underlying drivers of World-Macro events. As a result, we are driven to demystify often complex subjects into the form of accessible analytics, with a focus on coherent problem solving approaches. Our focus is on risk and opportunity.
After extensive interactions during 2016 on these topics, we decided to reinvent Directional Alpha to further address World-Macro risks and opportunities, joining our strengths into a focused actionable creative-driven boutique with a relentless forward looking focus on World-Macro strategies. We specialize on coherent high-level analysis aiming to avoid the Groupthink of the market. Even before re-launching Directional Alpha in 2017, we have reconfirmed that financial markets continue to be heavily influenced by Groupthink. This reality calls for a fresh view incorporating the fact that we are not in business-as-usual (BaU) any longer, and therefore, modeling needs to reflect this in order to protect your fiduciary duty.
Our high-level insights are not driven by what the markets are doing. We do not follow market trends, but we consider a mosaic view of the system, including fundamentals, technical, history, asset bubbles, debt, geopolitics, international relations, power considerations, and investment finance. We understand the key difference between cyclical and systematic crises. We are interested in what is actually happening and not in what people think is happening. This is a unique view point that has enabled us to detect early signals and provide coherent insights in a timely manner. Forewarned is forearmed. After a long walk, we re-created Directional Alpha – World-Macro.
Unconventional People lead to an Unconventional Team
Fernando Walter Lolo, CAIA specializes in Alternative Investments and World-Macro strategies. He founded Directional Alpha as a private asset management fund focused exclusively on tail risk, volatility trading, and hedging. He has 20+ years of global track record in finance. He focuses his businesses on unconventional/unorthodox approaches, as part of a difficult buildup rethought process of traditional/conventional methods. Fernando focuses on Volatility, Tail Risk, and World-Macro financial events. He also worked in selective assignments on funds’ creation and structuring for the Inter-American Development Bank (www.iadb.org) and for other funds in the Caribbean Region. He was also an active angel investor in only in selective deals. He has advised on international finance, FSB – Financial Stability Board, and G-20 high-profile related issues at the Ministry of Economy of Argentina. Prior to that, he worked in Global Alternative Investments for 10+ years at the World Bank Group in Washington, DC. Before that, he worked in Quantitative Finance, Corporate Finance, and Risk Management in Latin America (LATAM). Fernando strategized his specialization for a long period of time by following a selective “Mosaic” approach in different Ivy-leagues and other Institutions, by also including unconventional education. He has a strong focus on Investments, Fundraising, Investor Psychology & Risk Profiles, World-Macro, Prop Trading, and Geopolitical International Finance. He holds an MBA, a Master in Finance, and Post-graduate Degrees in Financial Engineering & Quantitative Finance from Harvard University, Columbia University, Universidad Torcuato Di Tella, Universidad de Buenos Aires, and Johns Hopkins University. In addition, he is a Certified Public Accountant and holds the CAIA designation (Chartered Alternative Investment Analyst) from CAIA Association. During his career, Fernando worked in the US, Emerging Markets, and Europe.
Cathal Rabbitte, FIA is an actuary, analyst, strategist, and journalist specializing in modelling coherence and the translation of developing macroeconomic themes into usable modelling insights and workable strategy. He serves as Chief Consultant Officer at Directional Alpha. He has over 20 years of experience in Europe, Asia and Africa, primarily in insurance and reinsurance. As a journalist he has extensive archiving and research experience as well as broad and deep knowledge of historical trends with a strong ability to put risk into cultural and historical contexts and to help articulate the limits of financial modelling to detect signals of the future and to minimize risk given economic turbulence. He has over 15 years of experience reporting and analyzing economic themes for various media. Cathal has analyzed and written extensively about corporate collapses and the near death of top global Reinsurance and Insurance Companies during the initial stage of the World Financial crisis in 2008-2010. The key in those cases was incoherent modelling and poor corporate governance responses to shifting risk developments.
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