New York (HedgeCo.Net) – Another strong positive month for the Varus Fund. Investment Week: plus 304bps MTD/ plus 630 bps YTD.
CEO Stefan Heieck said in a letter to investors today: “January European long/short hedge fund performance is directly linked to the European top longs performance which was down 4.3 per cent.
With around 60 per cent of the numbers for January so far reported to the EuroHedge database, the EuroHedge Composite Index is showing a fairly flat return of some 0.08 per cent.
As I highlighted in November and December Varus Fund is not invested in these crowded longs. Concentration and crowding of positions is very dangerous with a sudden rise of volatility as the positioning was at multi year highs going into the new investment year 2014. Thinking different helped the fund to achieve a plus 90pc percentile during the 40 per cent volatility increase and sell off in January 2014.
The same investment strategy was applied for February so far where we have seen CTAs and other market participants to decrease their market and index exposure to the lowest level since 2012. CTAs were selling the most index exposure for the past 12 months while at the same time the market bottomed out. I decided to reduce our overall investments towards 7 by the end of January and no risk hedges as the risk/reward was very good. This investment decision together with scaling back into several investments led to another strong performance with plus 304 bps MTD. The top performing investment MTD is Lanxess – as highlighted in December chemical stocks are the biggest non-consensus long in the market. BASF, AkzoNobel, Clariant and Lanxess have left their sideward trend and have been the top performing stocks in February overall followed by the material sector. Beside Thyssen (very strong FY reporting today) and Rheinmetall we remain very confident that Lanxess is trading on a 25 per cent discount vs fair value.” Heieck concluded.
Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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