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Treis Capital capitalizes on human nature


When he was the head of international equities for Principal Global Investors Inc., Kurt Spieler was in charge of $4 billion in assets under management.

Though he spent more than 16 years with Principal, Spieler isn’t looking over his shoulder as he sets a new course with his own investment advisory firm, Treis Capital LLC.

“I had been thinking about it for a couple of years,” said Spieler, who opened shop in April at 4150 Westown Parkway in West Des Moines. “I wanted to do my own thing, so the idea of a boutique investment shop with lower assets under management was very appealing to me. Second of all, I wanted to switch from what I’d call Principal’s more relative-return model — mutual funds invested 100 percent in equities — to focus more on total returns and strategies that would work in down markets as well as up markets.”

Treis (pronounced trice), offers a proprietary, behavioral-based strategy for identifying and investing in market sectors that are enjoying sustained upward price momentum but that have not yet peaked. The firm, which currently has $26 million under management, offers clients a tailored portfolio which can range from a zero hedge to 100 percent hedge to suit their individual risk tolerance.

“We believe that is something that investors are not getting from a typical mutual fund shop; we can tailor their portfolio to meet both their objectives as well as their risk tolerance,” Spieler said. “That’s something that you see a little bit of in the hedge fund arena, but you don’t see that at the separately-managed account level; that’s where we thought there was a niche for investors that have enough money that are now invested in mutual funds or in individual stocks with a stockbroker.”

Co-located with Spieler is Doug Ramsey, who left his position as asset allocation portfolio manager at Principal Global Investors to form his own company, The Behavioral Strategist, which provides research for institutional stock investors, and to work with Treis as its head of research.

“We sort of concluded that partnerships don’t work, so we wanted to keep it separate to a certain extent and just focus on the endeavors that both of us were interested in,” said Ramsey, who in his 15-year investment career has also worked for SCI Capital Management and Investors Management Group. “But we’re sharing expenses and resources.”

Though they didn’t directly work together at Principal, the professional relationship began there.

“I was interested in Doug’s research at the time,” Spieler said. “We kind of talked about how we could apply his research … We had a lot of similar ideas about how to manage money.”

Treis provides two avenues for investing in sectors, either through Exchange Traded Funds, or ETFs, which are effectively index funds for individual market sectors ranging from energy to financial services to technology, or through the Rydex family of sector index funds.

To choose the five sectors that Treis is invested in at any one time, Ramsey uses a proprietary methodology called SuMo, which stands for sustainable momentum.

“The energy sector is a good example,” Spieler said. “There’s still a lot of skepticism about it. That’s the type of sectors we’re looking for, where you’re seeing good momentum, good relative strength, but not everyone’s buying into it; there’s still skepticism that the rise is going to continue.

“Conversely, there are other sectors that may have good momentum as well,” he said. “but the professionals are no longer buying it and are effectively selling it to the public.”

A key to their approach is being invested in the uptrends while they’re still a “little stealthy,” Ramsey said.   “We’re trying to capitalize on human nature; humans love to get a deal on everything,” he said. “When the price starts going up, when energy finally broke out, for instance, people thought, ‘This strength is going to pass and it’s going to become a dog again.’ We can measure that degree of doubt or skepticism by looking at the futures markets.”

The firm only has one month of actual investment returns under its belt, but results from filling in data for the past seven years claim the strategy would have returned a 13.3 percent annualized return during that period with a 25 percent market hedge.

Treis markets primarily to Midwestern investors, selling the product to both financial planners seeking another diversification tool for their clients, and individually to mid- to high-net-worth clients.

Early on, the firm landed a subadvisory relationship with Clarke Lanzen Skalla Investment Firm LLC, a consortium of financial planners based in Omaha.

“So we’re looking for additional relationships with independent financial advisors, financial planners, to be an additional product in the portfolios of their clients,” Spieler said.

For individual investors, Spieler recommends investing between 10 and 20 percent of their portfolios with Treis as a means of diversifying with a low-risk sector rotation strategy.

The firm charges a management fee of 1.25 percent, which is lower than the average mutual fund fee, Spieler said.

“So we sell it as getting a value-added service for less than what you would see with an average mutual fund, so you’re getting more for less.”

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