Ex-Paulson Banking Experts Dismiss U.S., Europe For New Hedge Fund

Aug 10 2012 | 3:04pm ET

Two former Paulson & Co. executives are banking on banks outside of the U.S. and Europe's biggest financial centers.

Petrarca Capital, founded earlier this year by Robert Lacoursiere and James Fotheringham, is in the midst of its first fundraising. And it's telling potential clients that it plans to invest their money in financial stocks in Australia, Brazil, Canada, Chile, India, Russia, Sweden and Turkey—anywhere, it seems, except New York, London and Frankfurt.

Such countries are "levered to changes in global growth, and financial securities most sensitive to their domestic economies," the firm wrote in a marketing document obtained by Dow Jones Newswires.

While many hedge funds are racing into the financials space to take advantage of what they see as massive opportunities in a beaten-down Europe and a slightly less beaten-down U.S., Lacoursiere, Paulson's former head of global banks, and Fotheringham dismiss the thesis. In fact, the Petrarca partners say that France, Italy and Germany are home to some of the least attractive investment opportunities, while the U.S. has some moderately attractive ones.

"The financials sector is a levered play on macroeconomic cycles," Petrarca told would-be clients. "Performance dispersion is now increasing among global financials sector stocks."

Petrarca's first fund, when it debuts, will have between 15 and 25 longs and 20 and 30 shorts in its portfolio. It will focus on the largest banks, but will also look at brokerages, asset managers, insurers and specialty finance companies.

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