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

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.