Highmore Brings the Next Generation of Alternative Investing to Clients

Highmore, which is a global alternative asset management firm, investing in both public and private market investments, across asset classes and investment structures, was founded by a team with a long-shared history at firms such as Man Group, FrontPoint Partners, Bank of America Merrill Lynch, Citigroup, and Oppenheimer & Co. Headquartered in New York, with a presence in Los Angeles and London, Highmore currently manages more than $1.2 billion in assets.

I caught up with Dr. Joseph Julian, who is a Principal at Highmore. Dr. Julian gives us valuable insight into how Highmore unique strategic analysis of human behavior plays a significant role in investment success.

Q: Can you give us insight into company background?
The team has built investment businesses, developed differentiated alternative investment strategies, managed funds, and oversaw assets more than $25 billion. Senior partners also have extensive experience working within high profile ultrahigh net worth families to grow complex operating businesses, commercialize new technologies, and direct meaningful political and philanthropic efforts.

Highmore engages holistically with clients, not simply to safeguard and grow their assets, but to genuinely help clients who wish to make a difference: whether expanding a successful family business, starting a new venture, impacting their community, or simply securing piece of mind for future generations. Investors frequently rely upon past performance in selecting investments.

Unfortunately, past performance is not a good predictor of future success. Uniquely, Highmore identifies the DNA of exceptional investment talent, because the most reliable indicator of investment success is human behavior. Through a proprietary investment process developed to identify those behaviors that most link to investment performance, Highmore brings the next generation of alternative investing to clients seeking differentiated public and private market investments.

Q: What is your role within the company?
Highmore is an alternative asset management firm focused on investing in distinct opportunities and private companies in the growth stage of their business lifecycle. I’m a member of the investment committee and portfolio management team, as well as being involved in business and product development, and investment selection for the firm’s family office and institutional clients.

Q: What are some core principles that Highmore carries?
Highmore believes that people invest in people, not just numbers. Despite this fact, the scientific analysis of behavioral factors related to investment performance is almost universally ignored.

Investment performance cannot be predicted from past investment returns; however, it is possible to predict future human behavior from past human behavior. We see this fact as an overlooked opportunity, and a unique competitive edge of our investment approach. The Highmore team has spent years refining and developing proprietary behavioral analytics to be used in our investment selection, risk management, and client profiling processes – all outgrowths of the doctoral research of one of our co-founders at Oxford.

Highmore also believes Investments have a life cycle, just like any business. Visualizing this concept as a bell curve to the right you can imagine a large, established investment fund or opportunity at the peak of the bell curve.

Highmore invests to the left of peak maturity of an investment opportunity to increase the likelihood of maximum yield – a key differentiation of the Highmore approach, and one which requires a specific skill set which our team has developed over careers at some of the industry’s preeminent growth stage investment firms.

In doing so, Highmore believes investors have the potential of improved returns, greater transparency, and better alignment of interests.

Finally, a common thread in our approach is a focus on applying a scientific methodology to the investment approach – one which we believe is often lacking in the investment discipline.

The scientific method is an approach that has characterized natural science since the 17th century, consisting of systematic observation, measurement, and repeatability as it relates to the testing and modification of hypotheses.

Highmore has incorporated the core principles of systematic observation, measurement, and repeatability into the creation of a proprietary investment framework which attempts to solve for the deficiencies of the industry standard.

Q: How does human behavior correlate with investing trends?
Prediction and selection of future investment returns based upon past investment performance is misguided. Nevertheless, most investments continue to be chosen based upon backward looking data which has little or no predictive relationship to future performance.

Highmore defines this as the Quantitative Attribution Fallacy – basically meaning that investors choose investments based on false selection criteria. Highmore believes that most investments are, in fact, investments in people, and that the missing factor in investment selection is also the most obvious one -human behavior. This is an important revelation as very few investors consider the most predictive factor of all, that of human behavior, in any scientific manner when selecting investments. Interestingly, unlike past performance, human behavior is often quite predictive.

Q: What gives Highmore a competitive edge in the marketplace?
a) A focus on the rapidly growing area of alternative investments, which is the broadest part of the investment universe
b) A focus on varying alternative structures such as hedge funds, private equity, private credits, and real assets – across both public and private market investments
c) A focus on growth stage investment opportunities, as opposed to the commoditized offerings of most investment firms
d) A focus on applying a proprietary research methodology which is based in behavioral analytics
e) A team with deep experience, who has worked together through much of the careers

Q: What are some areas Highmore specializes in?
Alternative investments, both public and private market. This includes areas such as real estate and private credit, in addition to more traditional public market investments.

Q: Can clients have their portfolio customized to their own needs?
Our whole approach is about customization, so all client portfolios are fully customized.

Q: What are some pointers that clients should evaluate when picking the right alternative investment?
Due diligence and sourcing are critical in alternative investment selection, even more so than with traditional investments. As a result, leveraging a truly experience team is a necessity.

Q: What has contributed to Highmore’s accelerated growth?
a) A team with a deep investor and investment network which formed the early clients of the firm
b) Highmore has grown rapidly considering a market which has had head winds
c) A depth of products from direct investments, fund products, holistic portfolios to investment advice and diligence for RIA’s and family offices
d) Interesting investment opportunities that have performed

Q: What are your thoughts on real estate investments with current market trends?
We like industrial commercial real estate relating to E-Commerce and logistics, as this trend is still in an early stage regarding e-commerce retail activity. The supply/demand characteristics for large specialized warehouse facilities in key distribution locations close to large population centers looks favorable.


Dr. Julian-min
Photo courtesy of Highmore

Dr. Joseph Julian


Dr Julian is a Principal and Portfolio Manager at Highmore. Prior to joining Highmore he was Director and Portfolio Manager at Oppenheimer & Co., where he designed and managed investment portfolios for the private client group of Oppenheimer with a specialization in alternative investment asset allocation, manager selection, portfolio construction, monitoring and risk management for the firm’s more sophisticated clients.

 

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