In our approach to investments, we prioritize tranquility

Denis Litvinov has been managing investment portfolios since 2012, and since 2017, he has registered his company, Eagle Management, in Spain. Investors from around the world with varying risk tolerances turn to him, and individual financial instruments are created to meet their needs. We discussed where to invest money now, whether it's possible to double capital in one year, and what the manager does when clients worry about stock market declines.

Denis Litvinov
: Recently, it became known that the golden visa in Spain may be canceled, as the Prime Minister believes it contributes to overheating the real estate market. How do you view this situation?
Recently, it became known that the golden visa in Spain may be canceled, as the Prime Minister believes it contributes to overheating the real estate market. How do you view this situation? Honestly, I don't see any reasons for concern for potential investors yet. The thing is, there have always been three main grounds for obtaining a golden visa. The first is investments in real estate totaling more than 500,000 euros, and it is this provision that they plan to cancel. The second is residency permits given for investments of 1 million euros in securities or in some real business located in Spain. The third is a deposit of two million euros in the sovereign bonds of the Kingdom of Spain.
So, it turns out that the road to Spain for investors is not closed; there are various opportunities, right?
The announced decision has not yet been specified in terms of format or timing. There is a high probability that it will follow the Portuguese model, which suspended the issuance of golden visas for real estate purchases but left the other two grounds intact. I want to emphasize right away that we don't deal with visas; I just know how it works. We are not about documents but about providing a steady passive income. However, we can tailor an investment portfolio for the client to obtain residency permits.

What is profitable to invest in today?
In 2024, we are assembling portfolios consisting of three types of securities for almost all investors. The first, and priority, part is corporate bonds and bonds from different countries. The thing is, in 2022-2023, there was high inflation. It all started with COVID when so-called "helicopter money" was distributed: governments provided assistance to support businesses and households. Then, of course, there was the conflict between Russia and Ukraine, which triggered further inflation. As a result of all these actions, central banks of various countries started raising rates, and bonds plummeted. This year, a decrease in rates is expected because both inflation and bond prices are declining. In other words, bonds that have plummeted will start to rise sharply. The second part of the portfolio we usually take is stocks of large companies with good balances and dividends at around 3% per annum. McDonald's, Walmart, Johnson & Johnson, and so on. We look for options where stock prices are on the rise throughout the year. The third part consists of so-called growth stocks with low dividends but with significant growth in stock prices. These include technology giants like Apple, Microsoft, and Google.

What about investments in startups?
For me personally, this is quite a risky endeavor. We offer investors around 16-18% annual returns. Of course, a successful startup can bring even more, but the "risk-return" formula in investments has never been repealed.
Certainly, one should look at the quality of the startup, at the management, because it is the management that decides a lot in small companies. Actually, any company is similar to a state. The stronger and more developed the state, the less an individual personality decides there because there are institutions where everything is well-established.
But there are risks even with shares of large companies. There is always the possibility of a crisis.
Before making a decision to add a company to someone's investor portfolio, it undergoes a deep financial analysis. We roughly understand how much the business should be worth on the market now, how much it is worth now, and whether it has a certain discount. We forecast the time during which the discount on this security will be closed. And as soon as it closes according to our calculations, we immediately exit the position.
Moreover, we never take just one or two companies, but much more to reduce the risks of changes in market value. For large businesses with good balances, the likelihood of a decrease is always lower than for other securities. Quality securities do not fall so much, they always recover faster.
We are not in a hurry: if something happens in the market, we can wait. If we take, for example, a non-profitable period, like the 22nd, practically for all our investors, starting from the 23rd, all portfolios were already profitable. Simply thanks to the high-quality selection of securities.

Can you share some of your greatest achievements? For example, if someone entrusted you with managing a million and you added 100% to it in a year?
If someone told me they took a million from someone and made two in a year, I'd probably pinch myself. Because if we have very high returns, then we have very high risks.
We have portfolios that added 70-80% over two years, and portfolios that doubled every year. But these are strategies that were agreed upon with the investors. So, you can double the portfolio every year, with no problem. The question is, is the investor ready to bear huge risks?
In some of our portfolios, for example, we had derivatives with a risk of 40-50 percent. Throughout my twelve-year practice, they materialized for the first time in the 22nd year. But if you consider that the previous years, when we earned on them, were income, then it turns out they even slightly offset the losses, and people remained in profit. But it's a nerve-wracking story for investors.
So, of course, you can double accounts, but in our work, we aim for calmness.
How calmly do you sleep knowing that people have entrusted quite large sums of money and that everything can change the next day?
I can't sleep restlessly because it would affect my work, unfortunately.
Since childhood, I've treated money as a tool, so I never think in terms of dreams, like what I could buy with some money, and if I'm lucky, something cool like a Mercedes. Everything is extremely pragmatic.
When you treat monetary funds as a tool, then you basically understand that whatever happens, at any moment, you have to think calmly, with a cool head, and just make the right decision to change the situation.
If our investors saw me panicking or being anxious in the same 22nd year, we probably wouldn't be working now. We lost a few clients who just couldn't handle some situation of decline psychologically. They asked to close all positions and exit, but that was only five percent of the total number.

I believe tranquility is crucial because in any endeavor, psychology accounts for 50 percent of success.

Do clients often call, worried that stocks have fallen, essentially seeking psychological support?
Unfortunately, yes, but not often. Because with almost every investor, when we start working together, we discuss the rules of engagement. Many people consciously or subconsciously want to be involved in the process: they ask how we make decisions about buying, and whether we provide explanations. Some are surprised that we simply buy what we deem necessary and sell when we think it's necessary, and we don't even inform them about it.
Why? Well, of course, we can spend time discussing, and it does happen, but... If an investor can talk on equal terms with me or anyone else in our company on this subject, then they can do everything themselves without us, right? It's like with a doctor: if you know how to treat everything yourself, you won't go to a doctor.
There's always a certain percentage of positions in the portfolio that are in the red relative to the account, about 3-5%. In 2022, the situation was tougher, portfolios all dropped by 15%, and people started to worry. So, regarding the question about calming them down, throughout the year, we met with investors, explained, and showed on charts, like, "We're falling, but we'll stop here, and from there, we'll start working in the opposite direction."

So, you freely manage clients' funds and perform all necessary operations. How is this formalized, how is responsibility allocated between parties, and how is client security ensured?

We have adopted the most comfortable structure for the investor to ensure maximum protection and control over their funds at every stage. In essence, a brokerage account is opened directly in the client's name. Our authority is limited to executing transactions; we cannot withdraw any funds. Every operation is authorized by the investor, meaning brokers won't process a purchase without the client's code or FaceID.

Before starting, we create what's called an investment memorandum, outlining our investment horizon, financial resources, instruments, strategy, targeted returns, and embedded risks.

We provide quarterly reports and analytics, and only if the investor fully understands them, they transfer our management fee.

By the way, how is your compensation structured?

It's divided into two parts. First, a management fee ranging from one to two percent of the invested amount annually. It's deducted quarterly and depends on the portfolio's value. Second, 20 percent of the profits, meaning a portion by which the portfolio's value has increased.

Do you open brokerage accounts in Spanish jurisdiction? What about tax residency, and how does it affect profitability?

We don't open accounts with Spanish brokers; they're relatively small businesses with high fees and lack quality instrument services. For funds in Russia, we use Freedom Finance; we have a partnership with them.

For Western infrastructure, we primarily work with two major brokers: Interactive Brokers and Saxo Bank. Taxation is interesting here because neither SaxoBank, based in Denmark, nor American Interactive Broker are tax agents in Spain.

I'm not advocating tax evasion, but overall, this issue isn't relevant because Spanish tax authorities don't request this information, and foreign brokers aren't obliged to provide it anywhere.

Impulse. Dossier
Denis Litvinov was born in Almaty. He holds two degrees from St. Petersburg State Electrotechnical University (LETI) - one in Radio Engineering and Telecommunications and another in Financial Analysis from St. Petersburg State University of Economics. He also holds an MBA from Columbia Business School with a focus on investments.

He has worked in various positions such as Sales Director and CEO in different companies, some of which had their stocks traded on the stock exchange. He has represented the Kazakhstan national basketball team.

Denis has been living in Spain for almost 7 years. He is married and has two children. Denis runs a Telegram channel about investments called Fin Pro and offers consultations through +44 7832 307077 (WhatsApp) Max Kyron, CEO assistant.

The interview was conducted by Boris Sheynkman, the founder of the accelerator for relocated startups, S-HUB.