Among the oldest long-short funds still extant is the SC Fundamental Value Fund. Having started in June 1990, Peter Collery’s shop has generated returns of nearly 13% a year—three full percentage points a year better than the S&P 500, with volatility running at less than 7.5% over the past five years.
SC’s list of former associates includes Greenlight Capital’s David Einhorn, Lyrical Asset Management’s Jeff Keswin and SAB Capital’s Scott Bommer.
The fund scours the world for obscure value that the market has missed, not letting foreign language or unusual regulatory environments impede research. In February 2014, more than a third of its long positions were in Asia ex-Japan/China and nearly a quarter was in foreign property companies. Where the majority of investors were pouring into U.S. markets, SC was short one-third domestic shares. “Our shorts are not hedges,” explains co-manager David Hurwitz, “but absolute convictions that a stock is mispriced.”
Among the fund’s more unusual longs is its exposure to regional banks owned by the major French financial Crédit Agricole (CA)—Europe’s second-largest retail bank. Crédit Agricole du Languedoc (CRLA), Crédit Agricole de Normandie-Seine (CCN) and Caisse Regionale de CA Mutuel Alpes Provence (CRAP) all trade independent of CA.
The Long And Short
November 7, 2014
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