‘Passport King’ Builds Quant Trading Fortune

Chris Kalin is best known for turning the niche business of countries offering citizenship to wealthy foreigners into a multibillion-dollar industry, earning him the nickname “Passport King.”

(Bloomberg) — Chris Kalin is best known for turning the niche business of countries offering citizenship to wealthy foreigners into a multibillion-dollar industry, earning him the nickname “Passport King.”

At the same time, he’s quietly built a sizable fortune with a side bet on quantitative trading.

Kalin, 51, is a co-founder of Arnova Capital, an investment firm focused on systematic trading strategies that returned about 2,000% through June since its inception in the early 2000s, according to documents seen by Bloomberg. 

The Zug, Switzerland-based firm, which releases few details, made bets on energy prices during the pandemic as well as the Reddit-fueled GameStop Corp. trading frenzy, helping to increase current assets under management to more than $250 million.

As recent market volatility leaves some investors leaning more on external money managers, Kalin — who has at least $100 million in Arnova — is now focusing on directly managing his own fortune.

“I always thought the only way to preserve wealth is to create more,” Kalin, chairman of citizenship-by-investment advisory firm Henley & Partners, said in a Zoom interview. “One of the best strategies is just to keep going after opportunities.”

When he joined Henley & Partners in the late 1990s, it was an obscure wealth management and immigration consultancy. It has since helped dozens of governments raise about $12 billion in direct investments through citizenship or residency programs, while also advising thousands of multimillionaires on where and how to buy a passport of convenience.

Read more: Passport King Helps Poor Nations Turn Citizenship Into Resource

The company regularly issues an index of the world’s most powerful passports, with those from Asian and European nations making up the top ranks in the latest installment published on Tuesday. 

Through Arnova, Kalin joins a growing number of rich individuals taking more control of their money, disrupting how private banks and other investment firms typically cater to the world’s ultra-wealthy.

Some of the largest firms for billionaire capital are also opening to outside money as the expand and become more sophisticated. Swiss billionaire Ernesto Bertarelli’s investment group sought to raise more than $1 billion last year for its private equity and hedge fund division, while David Bonderman’s family office explored a similar move.

Arnova is opening up as well. While the firm still mostly handles money for a small group of rich families and individuals including Kalin, it launched two fund-like products in the past two years for external investors to gain exposure to Arnova’s proprietary strategies. It started a third this year, targeting contrarian bets outside its usual systematic trading strategies.

Trading Style

Kalin founded the venture that became Arnova in 2003 with longtime friend Pendo Lofgren, a Swedish native who previously created computer software for algorithmic trading strategies.

Kalin initially put in less than $1 million, but added more over the years alongside Lofgren, 47, the firm’s chief investment officer. The pair aims to exploit excessive optimism or pessimism in markets and has made more wagers outside their systematic strategies in recent years.

That includes betting big on fossil fuel firms when oil prices turned negative during the pandemic, as well as Coupang Inc. as shares in South Korea’s e-commerce giant slumped last year over growth concerns.

They also shorted GameStop in 2021 after a horde of traders on Reddit pushed the US video-game retailer’s shares to record highs. Arnova’s algorithm indicated they should cut their losses on the position, which was relatively small due to the stock’s volatility. But the pair overrode their traditional trading strategy and ended up making what Kalin described as a “decent profit” as the stock price tumbled.

“We decided to hold on,” he said. “But it was not exactly smooth sailing.”

Kalin grew up near Zurich and trained as a banker before joining closely held Henley & Partners, which doesn’t disclose financials.

Read More: Singapore Passport Is World’s Most Powerful, Replacing Japan 

Tall, with a runner’s build, his claim to fame before transforming the citizenship-by-investment industry was editing a roughly 760-page guide to doing business in Switzerland — a tome still found in the country’s embassies.

He’s also a founder of Swiss health-advisory firm SIP Medical Family Office and has a global real estate portfolio. Kalin’s money in Arnova, which only charges performance fees, makes up most of the liquid portion of his wealth. He declined to discuss the value of his other assets.

Kalin and Lofgren currently see dislocations in valuations for shipping-tanker companies listed on smaller stock exchanges, as well as oil producers in Latin American countries that recently elected left-wing political leaders, such as Brazil.

While they know of family offices tapping into Arnova’s funds, Kalin and Lofgren said they’re not sure of the exact number of outside investors. That’s because they outsource as many administrative roles as possible to banks and brokerages so they can focus on making money.

“We don’t want to hire a lot of staff and deal with all the nitty-gritty,” Kalin said. “We just like to focus on investing.”

–With assistance from Jason Clenfield.

(Adds passport index in eighth paragraph.)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.