Varus Ends Year Up Over 20%, Offers Soundtrack For 2012

Jan 17 2012 | 9:08am ET

Switzerland-based Varus Capital Management saw its returns slip 0.20% in December but Varus’ euro share class was up 20.7% for the year.

According to Bloomberg, the Varus Fund ranked in the 99th percentile of its peer group in 2011. The fund enjoyed nine positive months and even its down months weren’t so very down—its biggest loss came in April, when it slipped 0.4%. Its biggest gain, on the other hand, in January 2011, was 7.38%.

Varus, founded by Absolute Capital Management vets Stefan Heieck and Frank Siebrecht, ended the year with an average net exposure of 21.8% and gross exposure of 87.8%. In its latest monthly statement, the fund, which specializes in German mid- and large-cap companies, provided its outlook for 2012—along with an accompanying soundtrack.

Heieck and Siebrecht reiterate their real estate theme from 2011 in expectation of rising rents in most major German cities.The accompanying song is ‘Schaffe, Schaffe Häusle baue’ (roughly, “Work, Work, Build a Little House”) by ‘60s German pop star Ralf Bendix.

Varus also expects to see management changes and consolidation in sectors which have yet to recover from the 2009 crisis. “We believe restructuring cases will be back in focus of investors, once the economic development becomes again more predictable. Aperam, Beiersdorf, Carrefour, Celesio, HeidelbergerDruck.” The tune is Bob Dylan’s “The Times They Are A’Changin’.

The fund expects the German export and luxury segment to slow “on a weaker wealth creation effect.” Companies that benefited most from Chinese demand in 2011 will miss it in 2012, as a result of the Chinese debt crisis. The song? David Bowie’s “China Girl.”

Jim Morrison may not have been referring to companies breaching their covenants when he sang “This is the end,” but Varus’ managers think he could have been. They expect deteriorating business momentum in Q1 and Q2 2012, followed by the impact on cash positions, will cause several firms to breach their covenants leading to more capital increases.

Fund managers also see “interesting undervaluation” and M&A potential in Europe, amid falling corporate profit expectations—“Aixtron, Dufry, Lagardere,ThyssenKrupp.” All of which will take place to the tune of Moby’s “Signs of Love.”


In Depth

Fitch Says Alternative Asset Managers 'Stable' Despite Dry Powder

Nov 20 2014 | 9:30am ET

Ratings agency Fitch says the outlook for seven publicly traded alternative asset...

Lifestyle

Cohen Buys $101 Million Sculpture

Nov 12 2014 | 9:17am ET

Steven Cohen was the sole bidder for a rare Alberto Giacometti sculpture at Sotheby...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.