Emerging Manager Launches Deep Value Fund

Dec 1 2005 | 9:47pm ET

New York-based hedge fund Watsek Value Management has just launched its first fund, the Watsek Deep Value Fund, with $5 million in commitments.

Randall Watsek, president and portfolio manager, will invest in stocks of 15-25 companies he believes to be deeply undervalued, including both those located in the U.S. and overseas.

"Value investors look at the cheapest 40% of firms, I look at the cheapest 5%," said Watsek, a former research analyst at Dalton, Greiner, Hartman, Maher & Co.

The minimum investment in the fund is $500,000 and there is a one-year lockup. The management fee is 1% with 20% profit participation.

Watsek takes a bottom-up approach to investing, looking closely at individual companies and their financials. He won't limit himself to any particular sectors, but he also won't invest in companies if he doesn't understand the fundamentals of their business. His ideal time horizon for an investment is two to five years, but he will take short positions in certain circumstances, such as when a stock is extremely overvalued or he is making a pairs trade.

Watsek, whose fund is currently majority cash, plans to spend the next three months immersed in research, carefully selecting stocks. He hopes to be fully invested at the end of that time, and also predicts that he will soon have another $20 million in commitments.

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