Brian Stacks, manager of US fund giant MFS's recently launched Vertex hedge fund, has resigned, writ...
Brian Stacks, manager of US fund giant MFS's recently launched Vertex hedge fund, has resigned, writes Joanne Frearson.
The long/short fund, domiciled in the Cayman Islands, was only opened up in June and will now be managed by Mark Regan, who runs the domestic version of the fund, called the Contrarian Vertex long/short hedge fund, which is designed specifically for internal staff of MFS.
The fund is presently focused on mid-cap stocks. Regan has increased positions in selected technology stocks and sustained weightings in energy equities.
Technology previously had an underweight position but Regan increased this to overweight in June. He has invested in internet securities and software.
Regan chose these types of stocks because the security aspect of software has become an issue. His reasons are that people will always need security for their software. These companies have strong earnings and compelling valuations.
As regards energy, the fund's overweight position was sustained. In oil services and natural gas, he expects to see a prolonged supply and demand imbalance in these areas.
Stack's bias was also on small to mid-cap stocks, but started to rotate to mid-cap equities before his retirement to lower the volatility.
Stephen Coxshall, director of MFS, explained when the market begins to recover, mid-cap stocks outperform larger- cap equities.
'Hence, we see some good opportunities in the small and mid-cap area of the stock market,' he said.
The Vertex long/short hedge fund is an all-cap fund which has the diversity to invest in either small, mid or large-cap companies. It can be leveraged up to 1.5 times and does not use derivatives at all.
Stock selection is based upon internal research and MFS is a bottom-up stockpicking house. MFS has 55 analysts on its team who use fundamental research to pick equities. There is a strong emphasis on company visits, with analysts and portfolio managers utilising more than 2,500 companies. In addition, managers and analysts look for a strong balance sheet as well as a talented and experienced management team. The fund has no constraints on holdings.
In the fund, 70% of the positions are long.
The Vertex long/short hedge fund is a clone of the domestic version which launched in 1998. In that year, the Contrarian Vertex long/short hedge fund returned 46% and in the following year returned 276%. Since the Vertex long/short hedge fund was domiciled in the Cayman Islands in June it has been up 5%.
Minimum investment in the fund is $100,000. www.globaladviser.com
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