Sometimes the worst situations can create an opportunity. For former trader Victor Rodriguez, his kidnapping 14 years ago in his native Venezuela caused him to flee and migrate to the United States.
"I came to this country with no English, no money and no network, but I was ready for the American dream," said the 41-year-old Rodriguez, who owned a small institutional brokerage firm in Venezuela. His firm there, which grew to 35 employees, traded for institutional clients in Venezuela and for U.S. broker-dealers. As difficult as it might have been to leave his country and thriving business behind, he says it was an easy decision because he feared for his safety.
Today, Rodriguez is chief executive and president of LatAm Alternatives, a year-old firm that distributes U.S. hedge funds to investors in Latin America. His firm has seven salespeople in Latin America. It is among the largest third-party distributors of U.S. hedge funds in the region.
Even as a startup, business is good. The firm is profitable. But he predicts better times. "There is a tremendous amount of opportunity in this region," Rodriguez said. That is not just for hedge fund distribution. He sees new business possibilities for U.S. trading houses and service providers, as well.
Rodriguez backed up his belief with action. At the Florida Security Traders Association annual meeting in February, he helped plan an expanded program that included sessions on Latin American trading. Representatives attended from major Latin American broker-dealers, who came at Rodriguez’s behest. Rodriguez sits on the Florida STA chapter board.
Rodriguez notes the potential of Latin America, using pension funds in Peru as an example. Assets under management there total $30 billion, but that is expected to double in the next two to three years, he said. Right now, Peruvian pension funds can’t invest in hedge funds. But that law is about to change, which should open up new business opportunities. "There is this huge amount of liquidity there," he said.
Rising interest in Latin America also can be seen in a shift in international travel. He referred to a recent statistic showing that Miami International now has more international flights than New York’s JFK airport. Most of those Miami flights are bound for Latin America, he said.
Selling in Latin America is Rodriguez’s specialty. When he arrived in the U.S., he ran the educational unit in Latin America for a day trading firm. The firm, Pristine.com, would become the largest retail distributor of RealTick in the region. "Education is important because it allows you to create your own demand," he said.
Rodriguez moved to TradeStation Securities in 2004 and sold its trading product to hedge funds and brokers in Latin America. He began as a junior sales trader, looking to learn the institutional business from a U.S. perspective. He rose to become director of global institutional sales. He later joined Merlin Securities, where he sold technology and risk management tools to hedge funds in Latin America, before hanging his own shingle.
Traders Magazine spoke to half a dozen former colleagues and employers-all of whom call him friend. They all said Rodriguez had a strong work ethic and a can-do attitude. But to go along with his tenacity, he also possesses a "sincerity and purity" that makes him "so convincing," said Oliver Velez, who founded Pristine.com. They believe he will prosper in the capital introduction business, even though it is much different from selling a trading product or service. He’s good at opening doors, finding customers’ needs and building relationships. His cultural advantage, they said, is also big, given his Latin American knowledge and experience.
Mitch Ackles, president of the Hedge Fund Association, said Rodriguez has upped HFA’s membership in Latin America in a big way. "He did such a phenomenal job with launching our regional chapter and attracting people in each country that we immediately put him on the main board," Ackles said, "and that doesn’t happen too often."
Rodriguez stressed the importance of building relationships-and staying in touch. Relationships need to be win-win, and business partners must help each other, he said. A long memory, he stressed, has guided him throughout his career. "Remember who helped you," he said, "and remember to honor what you say you’re going to do."
Rodriguez had two goals after earning an economics degree in his country in 1989. One was to become a stock broker and help the capital markets develop in Venezuela. The other was to one day own a business. He would eventually achieve the second goal twice, once in his native country and again in the U.S.
He began as a runner on the Caracas Stock Exchange at Cavelba, one of the top brokerage firms in Venezuela. "My goal was always to be a trader and a market maker," Rodriguez said. In his eyes, traders represented the elite of the brokerage business. They not only traded for the top institutions in Venezuela, but also with foreign investors.
Rodriguez’s next step would not be the trading desk, but the research department. Going to research before trading was the normal career progression for rising brokerage employees. As an analyst, he learned the ABCs of how brokers earn commission flow and the psychology of investors. Beyond that, the role also gave him his first taste of the workings of institutional investors such as pension funds and family offices. Soon he found himself in the role he coveted: trader. It took three years.
Rodriguez was on his way. The trading desk was where the real money was made. Traders had to be versatile and trade across asset classes. They needed to be as skilled at trading commercial paper and fixed income-including restructured sovereign debt then known as "Brady Bonds" -as they were at trading stocks.
Domestic insurance companies and banks continued as steady trading customers. Rodriguez soon learned to trade with one important new customer base: U.S. brokerage firms. There were about five local stocks, or ordinaries, that traded as American Depository Receipts on the New York Stock Exchange and OTC. Overall, there were about 20 liquid Venezuelan stocks out of about 128 listings. The majority were traded by appointment.
According to Rafael Alcantara, who founded Cavelba in 1971, his firm was the first broker in Venezuela to trade with U.S. brokerage firms. "Victor was a very good and smart trader," he said. Alcantara described himself as a taskmaster as a head trader. He was hands-on and demanding, and why not? It was his capital on the line each day.
U.S. firms would call Venezuelan firms for quotes on the liquid ordinaries-and traders had to be quick. "You had to be able to do it in a heartbeat," Rodriguez said. This was complicated because he didn’t speak English and needed to overcome a language barrier to trade with his U.S. counterparties.
At the time, the future looked so bright for Rodriguez that in 1994 he launched his own brokerage firm, called InverT Capital Markets. Alcantara said it wasn’t uncommon for the best traders to leave his firm, either to open their own brokerage or to move to another firm for a sweeter deal. "We were known as a university, a training ground for traders," he said.
At the age of 25, Rodriguez achieved his dream of running his own firm. He continued his same book of business, transacting as an agent for domestic pension funds and U.S. brokers like Prudential Securities and Oppenheimer & Co. His three-man shop would grow to 35 in five years.
Clients were aware of Rodriguez’s trading ability, but as the new kid on the block, his firm was now able to offer clients an alternative to the big brokers in Venezuela. InverT Capital could provide the anonymity they needed for their most sensitive trades.
Business grew. InverT Capital was a member of the new Venezuelan Electronic Stock Exchange, which competed with the established Caracas Stock Exchange. Rodriguez was the youngest chief executive of a broker-dealer in Venezuela, and he was visible in the media, talking up his country’s markets. He was frequently on TV and in print, providing market commentary.
InverT Capital Markets grew to the point that it nudged its way into the top 10 trading firms and stayed there for three consecutive quarters. "I was profitable; life was good; I was a bachelor," Rodriguez said.
His old boss Alcantara said he was happy for his former trader. He respected Rodriguez because he was honest and did business the right way. That earned Alcantara’s respect, because it wasn’t uncommon for brokers to give clients kickbacks in order to get their business. "Victor would never do that," he said of his former trader. Besides, Cavelba was still the No. 1 broker in Venezuela.
Unbeknownst to Rodriguez, a rainy day in February 1998 would change his life forever. The trading day was picture-perfect for business. "We did a great deal of transactions for some of our biggest clients," Rodriguez said. And that night, a dinner was scheduled to further cement relations with one of the top banks in Venezuela.
After what appeared to be a successful dinner, Rodriguez dropped off his client, the bank’s treasurer, at his home at about 8:45 p.m. Minutes later, Rodriguez was alone and stopped at a traffic light with his window down slightly. "The next thing I know, someone said, ‘Freeze, don’t move,’" Rodriguez said. A gun was pointed at him.
The men rousted him out of his car and then Rodriguez found himself blindfolded in his backseat. The thieves took his wallet, eyeglasses and watch. Rodriguez was kidnapped. For the next five hours, he feared for his life as his captors drove around Caracas. They did their best to intimidate him.
"They hit me several times in my face, punching me," he explained. They wanted Rodriguez to tell them where he lived, so they could rob him. But he refused.
The one mistake his captors made was not tying his hands and taking away his shoes. Rodriguez decided he would try to escape the next time the car stopped at a traffic light. "I jumped out of the car, and I didn’t know where I was," Rodriguez said. "I now realize that was a silly way to react, because they could have killed me."
In fact, they did shoot at him, only he didn’t realize this at the time because his adrenaline was so high. He fled to a nearby business area with office buildings, and when he told a security guard his story, the guard responded that he had just heard gunshots. One month later, Rodriguez’s car was found with bullets in its trunk. When he escaped from the backseat behind the driver, his abductor in the front passenger seat had leaned out of his window and shot at him, only to miss.
Traders Magazine was unable to get a copy of the police report, but one government official, now retired, verified the kidnapping. He said Rodriguez’s case was big news because such crimes were unusual at the time in Venezuela and because he was a high-profile person in the media.
The next day, Rodriguez concluded it was time to leave. "My goal was to trade global markets, and I knew that there was no way I could do that in my country and be safe," he said. It took him seven months to unwind his business, but in 1999, Rodriguez moved to Florida.
The situation has only gotten worse in Venezuela. There were 1,150 reported kidnappings last year in Venezuela, according to the country’s data. That was a 29 percent increase over 2010. But the numbers don’t tell the whole story. The U.S. State Department estimates that 80 percent of kidnappings there go unreported. On the homicide front, Venezuela reported 19,336 homicides in 2011, up from 13,080 murders in 2010, an increase of almost 48 percent. Venezuela has one of the highest homicide rates in the world, the State Department reports.
Rodriguez has been back to Venezuela once since he left. That was in 2005 to visit family. He says he would return for business, but only when the country becomes safer. That would have to be after President Hugo Chavez is out of power, he said. But regardless of how safe Venezuela becomes, he could never uproot his family and return. Rodriguez met his wife, also a Venezuelan, in the U.S. They have two children. It would be unfair to move them, he said. "They are Americans."