Swiss-based RBR Capital’s Rhine Alpha and Rhine Alpha Stars funds bucked the downward trend for hedge funds in October, returning 4.8% and 9.1%, respectively.
That brings year-to-date returns for the Rhine Alpha fund (a Luxembourg-based UCITS IV, European equity long/short strategy) to 25.2% while the Cayman-based Rhine Alpha Stars (which pursues a similar strategy with a higher gross exposure) is up 25.3%.
“We have managed to generate returns on both the long and short book with particular alpha generation through shorts including, but not limited to, Spanish domestic banks and certain French automotives,” RBR's chief risk officer, Chris Gibson, told FINalternatives.
Gibson said the short side wins are particularly impressive given the recent rally by equity markets—the MSCI Europe ex-UK index (their nearest universe) was up almost 10.7% YTD in October.
The firm continues to find what it terms “excellent opportunities” in the Continental (ex-UK) European equity market.
“[W]e see stronger players in certain sectors get stronger and the weaker ones losing out; it is only a natural part of being in a recession. The bifurcation among quality in certain countries is also evident, with many French domestic-oriented firms losing out as they see the horizon of austerity approaching without the flexibility to cost cutting.”
Opportunities in Spain, said Gibson, are twofold: “plenty of over-indebted and weak firms with only a downward trajectory and plenty of inexpensive firms which have the staying power to muscle out the competition, the inexpensiveness of these quality firms is due to the fact that, being Spanish, they are very much overlooked.”
RBR Capital and the Rhine Alpha Fund were launched in 2003 by Rudolf Bohli, the former head of equities research for the boutique broker Bank am Bellevue (part of the Swiss Bellevue Group). The Rhine Alpha Stars fund was launched in 2005.
RBR runs CHF 25 million in the Rhine Alpha Fund and CHF 75 million in the Rhine Alpha Stars.