Saudi fintech joins battle for US retail investors

RIYADH: Saudi entrepreneur Nezar Bakhsh has joined the battle for US retail investors after launching a fintech startup that sells stock trading advice to traders.

His Quant Alpha platform offers AI-based software for investors, which he told Arab News: “Adds a layer of simplicity, reliability and academic rigor to investment strategies.”

The Jeddah-based company, launched in March 2020, provides research-based insights that private investors can use to make long-term investments.

Quant Alpha, which employs five full-time staff and 30 freelancers, caters to U.S. equity investors and focuses on small-cap investments – companies with a market capitalization between $300 million ($1.1 billion of SR) and $2 billion.

Bakhsh, 27, added, “We target high net worth clients in the US, UK, Germany and Switzerland, who tend to be tech-savvy investors who understand and appreciate our software.

“In the future, we plan to build a system for the Tadawul as well as for the Shanghai market and the London Stock Exchange.”

The fintech company, which does not act as a fund manager or broker, has 500 current subscribers, and Bakhsh said he expects sales of over $1 million in the fiscal year. through 2022. Quant Alpha is aiming for rapid growth, targeting over $13 million in revenue. from 50,000 subscribers at the end of its third year.

It faces fierce competition in the U.S. retail investor market, where firms offer zero or low trading fees to small traders. California-based retail investor platform Robinhood has grown rapidly since its launch in 2013 to around 13 million users, while Virginia-based E-Trade has around 5.5 million accounts. retail and corporate. These companies also offer business advice.

Bakhsh, 27, came to finance after an early start in science and engineering.

He earned bachelor’s and master’s degrees in electrical engineering at Pennsylvania State University, before joining the Saudi government-funded construction startup Istidama. This led to a three-month project in China, where he was part of a team that successfully converted agricultural waste into fertilizer and animal feed.

Soon after, Bakhsh found himself with free time in the Kingdom during the COVID-19 lockdown. Fascinated by the stock market, he began to develop his own investment and trading strategies.

Bakhsh said, “My results started to look very promising. And a few friends have also started seeing benefits using my strategies.

“One said, ‘All these online investment software platforms charge a lot of money, they don’t work, and they don’t have any academic research behind them. They are a complete rip off. What if you started renting your software? This got the ball rolling.

Baksh said his self-funded platform relies on a large amount of data.

He said: “Our membership base has access to all of our research, some proprietary indicators and our best performing portfolio, which is powered by our own AI algorithms.”

“We have what’s called a ‘multi-factor portfolio’, based on four key factors – momentum, value, quality and size – all of which are rigorously studied by the academic community.”

Baksh has released his trading strategies as an e-book, available exclusively to Quant Alpha subscribers.

He said: “Sophisticated investors are the best clients because they understand the cyclical behavior of a portfolio. The difference between investors who actually make money and those who lose money are those who understand their portfolio and are willing to be patient in times of underperformance.

Bakhsh noted that, similar to his own experience, the pandemic lockdown sparked huge interest in stock markets from retail investors in the United States who couldn’t go to work.

About 15% of U.S. retail investors started trading in 2020, according to an April survey by U.S. financial services giant Charles Schwab, owner of E-Trade.

However, many seasoned market watchers say a significant portion of these new investors’ trades are driven by anonymous advice on trading forums, which can lead to wild swings in the stock prices of companies that fall on their radar. .

Bakhsh said: “Unfortunately, I don’t see many private investors doing extensive research. They just keep trying things and don’t stick with it long term.

But this rush to new investors represents an opportunity for the Saudi platform.

Bakhsh added, “I am definitely excited about this huge influx of new investors. I hope to have the chance to educate many. I’m doing my part and hope it works for us and our customers.

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