One man uses mid-caps and zero leverage to post 65% gains from a Markham office
A one-man hedge fund operating beside a gas station and a Costco in Markham just outperformed many of Bay Street’s biggest names, according to a feature by Bloomberg.
Lucida Capital, run solely by Francis Lau, gained 65 percent from April through the end of last year, while “few of his larger and more established rivals returned more than 40 percent.”
His formula is straightforward: mid-cap stocks, zero leverage and a short commute.
Lau launched Lucida Capital in April from his own neighbourhood in Markham, a suburb with a predominantly Chinese population about 30 minutes from Toronto’s financial centre.
By cutting out the Bay Street commute and staying close to everyday essentials like gas and groceries, Lau said he can “squeeze in one more call, or another meeting.”
He focuses on companies with market capitalizations between $2bn and $10bn, saying they offer “the inefficiencies of smaller firms but the liquidity of bigger names.”
He also noted that not many funds in Canada specialise in mid-cap stocks.
Lau typically holds 15 to 20 names at a time, spread across US and Canadian mid-caps.
According to Bloomberg, Lau manages between $50m and $100m for mostly wealthy individuals, split between US and Canadian mid-cap equities.
His top positions included FTAI Aviation Ltd., Enerflex Ltd. and IREN Ltd., which gained 36.7 percent, 55.1 percent and 284.6 percent respectively, based on data compiled by Bloomberg.
Although those companies come from jet engines, natural gas and cryptocurrency mining, they share a recent theme: they “have converged on last year’s hottest money-making train” by pivoting to supply power for data centres driving artificial intelligence.
Lau said he deliberately keeps his opportunity set wide, explaining that he likes to “keep [his] mind open and review opportunities on a case‑by‑case basis” and that he is “not just a Canadian portfolio” and “not just a US portfolio.
His risk philosophy centres on avoiding blow‑ups, not chasing every trend. As he put it, “If I can minimize the number of losers, the winners are just there” and “Protect the downside, and the upside will take care of itself.”
According to Bloomberg, he does not use leverage, arguing that this helps him manage risk more effectively.
That stance contrasts with the typical hedge fund playbook, where firms “use leverage to amplify returns, borrowing to increase exposure to their most promising ideas while taking on greater risk.”
Bloomberg noted that funds without leverage can better “mitigate losses in the event an investment sours.”
Lau’s numbers stand out even in a strong year for Canadian hedge funds.
A Royal Bank of Canada report viewed by Bloomberg showed the event‑driven Lynwood Opportunities Fund at about 67.8 percent, Lucida Capital at 65.3 percent, the Pender Alternative Select Equity Fund at roughly 40 percent, and Anson Fund Management’s flagship vehicle at 21.2 percent.
The report also put Anson’s total assets at about $2.4bn.
Lau, 43, immigrated to Canada from Hong Kong at age 10 and spent about two decades at Bay Street firms before going out on his own, most recently at Vantage Asset Management.
He now runs Lucida Capital from Markham, far from Toronto’s financial core, but firmly in the middle of one of last year’s strongest trades and one of Canada’s top hedge fund performance tables.
