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Digital Subscriptions > The Hedge Fund Journal > Issue 128 – Nov | Dec 2017 > Kairos’ Federico Riggio: Shooting the Lights Out

Kairos’ Federico Riggio: Shooting the Lights Out

Tomorrow’s Titans 2010-2016: Revisited

PROFILE

The Hedge Fund Journal has been aware of Federico Riggio’s fund management prowess for nearly ten years, initially during his co-management of top performing Italian equity long/short strategies at Kairos. The precocious analyst was thrown in at the deep end, becoming a co-portfolio manager just a year after he joined Kairos in 2009 – straight after graduating. Riggio, who is now CIO of KIM Ltd. Single Manager Funds and the manager of the Pegasus strategy, first appeared in THFJ in 2014, when he featured in our biennial ‘Tomorrow’s Titans’ survey of rising star hedge fund managers, in association with EY.

Kairos Group, which was set up 18 years ago in the early days of the hedge fund industry in Europe, is one of the leading alternative investment managers in Europe, now running around €11 billion in different absolute return products. The firm has a solid and stable investor base made of high net worth individuals and family offices primarily in Europe and Asia, but over time has developed strong relationship with various sophisticated institutional investors, among which are one of the largest sovereign wealth funds in the world, one of the biggest Asian asset managers, two of the largest insurance groups in Europe and several pension funds and foundations. Riggio’s Pegasus strategy manages more than €1.5 billion and generated a stellar 52.99% return during its maiden year of 2014. The stellar returns were generated through a variety of winning trades, some of which were reviewed in our 2015 profile: for instance an Italian non-life insurers trading below book value; Fiat’s spinoff of Ferrari and a takeover bid for Vienna Airport. This year Riggio is back on track to repeat such an amazing result despite the significant growth in AUM of the fund from the initial internal seed of around €40 million from the Kairos’ partners.

After four years and significant growth in AUM, Riggio, overseen by Kairos CIO Guido Brera and assisted by six experienced senior sector specialists (Pietro Ajello, Oriana Bastianelli, Michele Fiumara, David Grazzini, and Vittorio Villa) continues to generate exceptional returns. The flagship strategy has advanced by more than 150% since inception in January 2014, which is well ahead of its stated target of 12-15% and most of his peers. Even more interestingly, Pegasus has shown correlation to equity indices of only between 0.3 and 0.4, which is explained partly from its idiosyncratic catalyst-driven trades, which tend to have a beta much lower than market indices, but also from its net long exposure limited to around 50-60% and the ability of the team to generate performance on the short side.

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