Silverway, 'match ball' in the world of investment funds

BarcelonaWhen he was young, Pedro Escudero (Astorga, 1975) was on track to become a professional tennis player. He is from the same generation as Carles Moyà and Albert Costa. But a serious injury forced him to give up racquet sports. He went to the United States to recover and there he earned a scholarship to study in the country and stay. Since then, he has accumulated three decades as an investor on Wall Street, in recent years with his own fund with a return above that of the S&P 500. He is now launching a fund in Spain "to democratize elite investment" with which he plans to raise up to 2 billion euros, starting with stakes of 500 euros. The subscription period has begun once approved by the Luxembourg regulator with authorization to be marketed in Spain.

The recipe of the Silverway Global Apex Equity Fund, managed by Silverway Asset Management and subject to EU regulation, is to focus long-term on between 18 and 25 listed companies, mainly from North America and Europe. These are companies with "solid competitive advantages and recurring cash flows in markets with legal certainty," he explains. Therefore, "the core" of his system is research, investigation. And thanks to European regulation, you can have a client with 100 million and one with 500 euros in the same vehicle, unlike US regulations. This facilitates the entry of small investors, who can enjoy strategies that are usually aimed at large institutional investors, although for a limited time given the weight that 500 euro clients acquire, as he explains.

And is there any secret recipe for obtaining good returns? Well, invest in companies in sectors where there is not much competition and a lot of capacity to increase prices, explains Escudero. "For example, US railroad companies. There are four of them. Two are on the West Coast and two on the East Coast. So, really, they are two duopolies. What happens? We look at the supply side, the barriers to entry. How is a new railroad company created? It's impossible." There is no competition. And on the demand side, "you need inelastic demand, meaning you must have a product or service with high, irreplaceable demand, and the ability to increase prices and for that demand to continue to grow."

Predictability, growth, and price

Returning to trains. To move very heavy things, there are only two competitors. One is the airplane, which is not suitable for this, and the other is a truck, which can transport a maximum of two containers, explains Escudero. And this makes it "possible to increase prices". And then, what is missing? "Volumes. You grow at the speed the country grows". This provides predictability, one of the three components of a good investment, along with company growth, because otherwise, stocks won't go up. And regarding price: "A price where you pay less than it's worth, which is called value", he adds.

And then there is a second good investment, which is the opposite and consists of competing on price. There are no barriers to entry. "The business model allows you to be the lowest-cost provider". In short, it's about "maximizing something in the production process, doing something faster, more efficiently than others in logistics and production speed, such as an Inditex". Another example is Ryanair.

The objective, whose management company was registered with the National Securities Market Commission (CNMV) on January 23rd, is to gain staff and have about twenty people by the end of this month, with the idea of reaching 25. And they are all over Spain, including Barcelona, where Escudero presented the fund a few days ago to potential investors. Recently, Javier del Pozo Cortadellas has been hired for investor relations, a professional with ten years of experience at Mediolanum.