The hedge fund manager's first long-only product will be available by December
London-based hedge-fund manager Beaumont Capital is to launch its first long- only product by the end of the year. It will be a European equity fund managed by Raphael Kanza.
This will be the London-based firm's third fund since its inception on 2 July.
Kanza's team already runs a $4.8m global long/short fund, which has not yet been externally marketed, as well as a E28m long/short European fund which is the company's main fund.
The Beaumont Global Equity fund aims to achieve consistent, positive, absolute returns for investors. It will invest both long and short primarily in equities on a global basis in the mid and large-cap market segments. There will be approximately 30 long and 30 short positions.
The Beaumont European Equity fund's investment objective is to generate capital growth by investing both long and short in European equities in the mid and large-cap market segments.
Investment philosophy for the fund is to look for absolute performance in markets and stocks and not relative performance. The portfolio typically holds between 20 and 45 stocks. The fund currently has 10 long positions and 10 short positions.
The fund controls volatility by actively managing risk and in strong market conditions will take on risk, be fully invested and, if appropriate, use leverage to maximise returns.
In difficult market conditions, the fund will aggressively raise cash and, if appropriate, increase the percentage of the portfolio invested in short positions. It will also use derivatives to hedge market risk and protect returns.
Investment process focuses on three key indicators ' the liquidity environment, corporate profitability and market valuations.
The lead indicator is the liquidity environment. At the macro level the fund looks at interest rate trends, merger and acquisition activity and new issue activity to determine how supportive the environment is for supply and demand as well as future economic and corporate profit growth.
At the market level the fund monitors closely the liquidity levels of investors as well as the liquidity levels of stocks, as measured by turnover.
The second indicator is corporate profitability. Beaumont compares its views on earnings prospects for companies with those discounted by the market.
Third, the investment process involves looking at the absolute valuation levels of markets with historical trends, against bonds and expectations for future earnings growth.
In stock selection on the long side, Beaumont looks at identifying underrated medium and long term growth opportunities.
Of secondary importance is the search for companies selling at a discount to their intrinsic value. On the short side, Beaumont looks at under-performing companies rather than over-valuations.
Sectors currently in the fund include consumer non-durables, consumer durable, basic industries and general industries. Holdings include Swedish Match, Porsche, Zodiac and Lafarge.
Minimum investment for both funds is $100,000 or E100,000.
For the Beaumont European Equity fund, management fee is 1.5% per annum of NAV. Performance fee is 20% for class A shares or 15% for class B shares of any increase in NAV per share, subject to a high water mark.
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