Carbon, Energy Specialist Launches Equity Long/Short Fund

Apr 2 2013 | 11:52am ET

Commodities firm CF Partners has launched its first stock hedge fund, focused on the utilities, oil and infrastructure sectors.

The CFP Equity Fund, a long/short vehicle, debuted in December with US$29 million of internal capital, and is now accepting outside capital. The fund will invest in between 20 and 40 positions, primarily stocks, although up to 35% of its assets can be invested in commodity futures-linked swaps. The latter will be used to make relative-value plays on some of the companies in its portfolio, Risk.net reports.

To run the new fund, London-based CF has added Alvaro Ventosa, formerly of Spanish hedge fund Cygnus Asset Management, as chief investment officer. At Cygnus, which he co-founded, Ventosa managed a strategy similar to that of the CFP Equity Fund, although the new vehicle is global in scope, while Ventosa's former fund focused on Europe. Still, Ventosa said the fund is concentrating on Europe and Latin America at the moment.

"We launched this fund for two reasons," CF's head of business development, Thomas Rassmuson said. "First, we wanted to leverage the in-house energy and regulatory expertise and secondly, Alvaro became available. It's a function of strategy and getting the right team."

CF Equity targets annual returns of 15%; it has returned 0.38%, 3.53% and 2.42% in its first three months. The new fund will employ a maximum of two-times leverage.

Ventosa told Risk.net that he's currently bullish on renewable energy and manufacturers, and bearish on electricity. "Power markets have been struggling of late due to several factors," he said. "Weak GDP in Europe and increased attention to energy efficiency from governments has resulted in lower demand for electricity. On the other side, the market is heavily oversupplied."

The Cayman Islands-domiciled fund charges 2% for management and 20% for performance. It offers monthly liquidity and has a minimum investment requirement of U$1 million or €1 million, with plans to soft-close at US$500 million. Credit Suisse and Morgan Stanley serve as prime brokers and Deutsche Bank as administrator.

CF Equity is CF Partners' third hedge fund. The seven-year old firm already manages a carbon fund and an energy fund.


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