Waratah Expands AUM Rapidly Since 2010 Launch

Jun 13 2011 | 11:09am ET

Canadian hedge fund manager Waratah has seen its assets under management grow from $25 million at launch in July 2010 to $160 million as of May, 2011.

Waratah co-founder Blair Levinsky told FINalternatives the assets have all been generated domestically in Canada, “It’s a combination of high net worth, family offices and institutional, in that order.”

Levinsky says Toronto-based Waratah’s strategy represents the marriage of capital protection and risk management with good stock selection.

The firm operates three long/short equities vehicles. The Performance Fund is a “best ideas” fund that focuses North American equities, targets an annualized return of 15% and features the fewest positions and heaviest weightings of the three funds.

The Waratah One fund features the same focus on North American long/short equities but targets 8-12% annualized returns and is highly diversified with much less market exposure than the Performance fund (and overlaid with a quantitative risk model).

The third vehicle, the Waratah Income Fund, is a long/short dividend equity fund that also targets annualized returns of 8-12% while trying to achieve 4-7% portfolio carry from long dividends versus short dividends. Long side stocks in the fund must have dividend yields of 2% or higher.

In May 2011—a month which wasn’t generally kind to hedge funds—the Performance fund was up 0.5%, bringing its YTD gains to 6.0% (and 30% over the past 11 months); the Waratah One fund was up 0.1%, or 1.2% YTD; and the Waratah Income fund was up 0.7% or 5.0% YTD.

Levinsky expects he and partner Brad Dunkley will launch offshore versions of the funds within the next six months. “It’s heating up in terms of interest outside of Canada,” says Levinsky, “I’d say when we get to a critical mass in terms of interest and/or allocations, then we’ll launch those funds.”

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