Tages Engadine Long/Short

The fund is an active Equity Long/Short strategy mainly focused on European markets. The portfolio is managed by Marcello Sallusti (founder of Engadine Partners; ex. Egerton) who invests based on fundamental analysis with a traditional bottom-up approach. Idea generation starts by screening a European universe of 1,200 stocks, filtering for size, liquidity, capital structure, and track record. This reduces to an investable universe of 600 stocks, which is further cut based on business models, sector exclusions, management quality, and earnings volatility. The final core universe of 200 stocks is selected based on RoCE, 3-year risk-adjusted IRR, and comparisons to global peers. Fundamental analysis is undertaken to assess earnings quality, management incentives, and capital allocation. The investment team relies on proprietary models, sensitivity analysis, and company level research that including meetings with management as well as third-party insights. Long positions target high-quality companies with proven management, while short positions focus on fading businesses or companies facing operational challenges. Portfolio construction then balances high-conviction long positions and strategic short positions, ensuring exposure to companies that meet strict risk-return profiles. The fund's long book is relatively concentrated, with positions ranging from 6-7% of NAV, while short positions are around to 2-3%. The short side has been a consistent source of alpha, contributing significantly during market downturns like 2022 and is viewed as a profit centre, not merely a hedge. The portfolio does include a derivatives overlay for tail hedging, using out-of-the-money puts or put spreads on Euro Stoxx 50 to help mitigate extreme downside moves. The fund maintains a flexible approach to exposure, typically with a gross exposure of 120-200%, with net averaging 20-80%.