CEO, CIO and a MOM: Pooja Malik
Sonal Chandna
A “Women in Leadership” fellow at CSU East Bay, Sonal is passionate about technology, marketing and people
Pooja Malik is a founder and General Partner at Nipun Capital L.P. She has over 15 years of investing experience and has served as a Managing Director at Barclays Global Investor/Black Rock, where she managed long-only and long-short portfolios for institutional investors. Pooja, in conversation with Sonal, a fellow at CSUEB — College of Business and Economics, talks about her life’s journey, childhood days and cultural beliefs.
Q. Tell us a bit about your role at Nipun Capital and how that came about.
I started my equity market career focused on Asian markets and have witnessed the development of those markets for over 15 years. The idea behind Nipun was twofold. Firstly, the structural growth opportunity in Asia is very attractive — Asia is a huge and growing part of the world equity market, but most U.S. and European institutional investors are under allocated to Asia. Back in 2011, we had predicted that over $2T would get invested in Asia over the next 20 years and that thesis is playing out now. Secondly, Asian equity markets are relatively inefficient compared with the U.S., meaning there is more opportunity for generating returns through active stock selection. We launched Nipun Capital in late 2011 with the goal of being the premier Asian equity manager for institutional clients and are on track to achieving that goal.
Q. What do you typically look for in companies when you invest? What is your philosophy on making investments?
We believe that the daily prices of individual stocks are informed by, but not constrained to, their long run fundamental values. Because short term prices can reflect capricious investor sentiment, systematic investing based on sound fundamentals will generate consistently higher average returns. Our strategies are designed to identify firms with solid fundamentals trading at reasonable prices, and to avoid firms with contrary features.
We begin with a simple economic question: “What drives stock returns?” We believe firm level returns are a function of current and future fundamentals (as measured by expected residual income, dividends or cash flows), and investor sentiment (non-fundamental price pressures associated with behavioral biases or liquidity driven demand). Hence, our stock picking approach is focused sharply on detailed analyses of company fundamentals and investor sentiment. Our investment philosophy is based on the application of fundamentals and behavioral insights within a systematic investment process taking into account the intricacies of each market. Our approach is completely data-driven, we process several gigabytes of data on a daily basis. This data becomes an input into our models and the models drive stock selection and portfolio construction.
Q. What is your leadership style?
I am a very ‘lead from the front’ kind of leader. I enjoy taking on challenges with my team; setting a vision and direction, letting the team drive execution. I like to set tough but achievable goals because I have seen this bring out the best in my team.
Q. What leadership attributes are you looking for in your founders when you commit to investing?
We are public market investors. Unlike early stage VCs, we invest in publicly listed companies and can evaluate the past record of the CEO or management team of each company. We do this in a systematic, data driven way by evaluating two key sets of ideas. The first is company profitability and growth. This would include a detailed analysis of the company’s top line and bottom-line growth, realized growth vs. expectations, how the growth was financed, the return on capital invested, the sustainability of growth etc. The second set of ideas is designed to measure the alignment of incentives between the CEO/management and minority shareholders. We are minority shareholders and it is important to us that the management is treating minority shareholders fairly.
Q. Were you ever in a bind? Was there ever a time when everyone around you told you that your idea would not work? How did you deal with that?
LOL! We have all been there. As an entrepreneur, hearing “no” is a part of your life. A very smart, experienced VC told me that “no” is just a “yes, waiting to happen”. I have really internalized this. Every time I hear a no, it is an opportunity for me to demonstrate that it can be done and go back with clear results to convert that no into a yes.
For example, at one point very early in my career at a large organization, our U.S. small cap strategy was struggling. Performance had been tough for three years and the team had lost all motivation. I took on the role of turning it around although many were skeptical of my investment and leadership abilities. I ignored all the “noise” around me, focused on the content, diagnosed the issue and came up with a set of creative, out-of-the box recommendations for the strategy. I worked bottom up with the team and understood the issues firsthand. As we started implementing the changes one by one, performance started to improve, and the morale of the team soared. Ultimately, the team and I completely turned around that strategy when most thought it couldn’t be done.
Much later in my career, when I started Nipun Capital, I faced the same skepticism. Nevertheless, Nipun now manages over capital for some of the most sophisticated institutions in the world and our track record is amongst the best in quantitative investing.
Q. As a woman, what is your perspective on the lack of female representation on corporate boards?
I am glad to see rising awareness about this issue. Awareness is the first step to change. The lack of female representation arises from a couple of major issues. Firstly, people hire from within their networks. Current board members are mostly male, and their networks are mostly comprised of other men. This is why you often hear the complaint about “there’s lack of a pipeline of strong women candidates”. My network is comprised of a lot of women and today my firm, Nipun Capital, which is strongly anchored in data analysis and predictive modeling, is comprised of women in over half the roles including in research and portfolio management. I think the board needs to consciously go outside their traditional networks if they want to truly change their composition.
Secondly, leadership in women can look very different from leadership in men. It can be hard for men to recognize leadership in women. It is easy for people to believe that people that look like them and act like them will be more successful. On average, men tend to be more outspoken about their accomplishments and talent and so boards need to put in more work to find women Directors.
Q. You are a go-getter. How has that helped in building up a team?
I have my own biases. Everybody has biases, the key is to be conscious of them. I look for people that are curious, intelligent and have a strong work ethic. On a skill-will axis, I lean more towards will than skill alone. I believe a person can learn almost anything if he/she decides to commit to it.
When I started in the quantitative investment management industry, I was a misfit. In fact, during my MBA, the only course I got a ‘B’ on was statistics. Ironic! Today, a core aspect of my job is analyzing and interpreting data. My own experience is validation that a person can learn and grow in many dimensions. At the same time, this is also an inherent bias in my decision making.
Q. What was your childhood like? Did you always want to become an entrepreneur?
My childhood was filled with love. We had good times and tough times but all throughout I felt very secure in the love from my family.
My father was an innate entrepreneur. He left the Army to start a small business, sold it and then set up a software product company in the 1980’s when this was almost unheard of. He was always exploring entrepreneurial ideas including establishing a wealth management firm using data and technology to build portfolios. I remember how he had imported computers for his business when they had just been released.
My father died when I was 12 but his discipline, work ethic and entrepreneurial spirit always stuck with me. My parents always believed in me and that made me believe in myself. They taught me that I could do anything if I really wanted to do it and committed myself to it.
Q. Do you believe that your South Asian heritage has influenced your leadership style in any way? If so, how?
You know ‘The Holy Geeta’ says “Do your duty and don’t worry about the result”, or in Hindi: ‘karm karo, fal ki chinta mat karo’. This has been a life motto for me. In today’s world, it is so important to have a North Star that anchors you. And for me, doing the right thing and not worrying about the outcome has been a life principle.
It has worked out well for me as my mentor and partner Dr. Charles M.C. Lee, who is also a professor of accounting at Stanford University, also holds similar beliefs.
Q. If you could go back in time, what advice would you give your 15-year-old self?
My 15-year-old self was a mature, responsible, respectful person! Or so I would like to think! My one piece of advice to my younger self would be to think big and believe in your abilities. It took me a long time to recognize my abilities and believe that I could compete with the very best in my field. My husband has been my strongest supporter and has always believed in me and my abilities. He inspired me to start Nipun and always supported all my professional endeavors (including crazy ones like 3-day trips to Hong Kong!).
Q. What is one piece of advice you have for young women entrepreneurs entering a male-dominated profession?
Build your network. Expand your network. Go outside your comfort zone to build your network. It is easy to network with people that look like you and behave like you. But you need to have a stronger and wider network than that.
Ask for help. Many successful women professionals find it hard to ask for help. Your network is there to help you when you need it. Ask for help.
I also think women need to have a small, core support base. I see a lot of women in my network that have self-doubts, hesitation and imposter syndrome. It is important to have someone who can hold up a mirror for you and help you understand your accomplishments and abilities. In my case, my husband did this for me and it has been fantastic to have that support. I have benefited strongly from a very supportive community, professionally and personally.
Q. What book have you read recently that you would recommend?
I am curious about everything so I read a lot. A recent read that I highly recommend is: Talking to Strangers: What we should know about the people we don’t know by Malcolm Gladwell (Author). It highlights the biases we have using anecdotes and statistical evidence. And discusses how data can be used effectively in our daily lives.
Another book that I read and re-read is Factfulness by Hans Rosling. Even my 10 year old son has read it. It’s a very illuminating book on the state of the world today and the huge progress we have made over the last several decades.
Author Bio:
Sonal has worked in Strategy and Operations at Pitney Bowes Inc in India for five years. Aspiring to be a digital marketing professional, she is looking forward to advancing her career with an MBA degree at CSU East Bay. Sonal is also a PADI certified scuba diver, a resilient traveler and an avid animal lover.
