Michael Frazis, founder of Frazis Capital Partners, is navigating a notable turnaround after a tumultuous 2022 that saw his flagship fund experience a severe 67 per cent decline. Frazis Capital Partners manages a fund that targets “explosive growth” opportunities primarily within technology and biotech stocks. After doubling investors’ money in 2020, the subsequent market downturn posed significant challenges, leading Frazis to implement drastic strategic adjustments to avoid a repeat of that difficult year.
Central to this resurgence was the transition to a quantitative-based investment approach. This new methodology prioritises the direction of a share price, automatically exiting positions that show significant losses and taking profits when stocks have surged, often two to four times their initial value. Frazis noted that had these models been in place in 2022, the fund’s performance would have been dramatically different. This strategic pivot paid off handsomely in 2023 and 2024, with the fund returning 40 per cent and 56 per cent respectively, largely by capitalising on the rally in semiconductor manufacturers such as Nvidia and ASML.
The quantitative models proved instrumental in recent market shifts. As the demand for semiconductor chips, fuelled by large language models, began to slow, Frazis’s systems indicated a sell-off, prompting the fund to build a substantial cash position. This foresight proved crucial during subsequent market disruptions impacting software companies. More recently, signals of extreme positioning by hedge funds, heavily exposed to semiconductors and underweight software, triggered a rotation back into the beaten-down software sector. While Frazis’s short and medium-term performance figures are undeniably impressive – including an 87 per cent return over 12 months and a 45 per cent annualised return over three years – he remains cautious, acknowledging that some recent software buys may have been mistimed.
