The investment objective of the fund is to provide a positive absolute return and capital appreciation independent of market conditions over the medium to long term.
Latest Meeting Note
Meeting 25 Mar 2020
The research team met with Adrian Courtenay, portfolio manager of the Odey Special Situations UCITS fund. The strategy employs a long short equity approach focused on complex transactional situations (c. 70% of risk) where the manager is... Read more
The research team met with Adrian Courtenay, portfolio manager of the Odey Special Situations UCITS fund. The strategy employs a long short equity approach focused on complex transactional situations (c. 70% of risk) where the manager is able to identify mispriced securities (due to a transactional trajectory) throughout intensive fundamental research. The remaining part of the portfolio is opportunistically invested in announced equity merger arbitrage transactions (c. 20% of risk, typically consisting of 'safer' short-dated M&A positions) and other complex situations (c. 10% of risk) such as contingent currency merger arbitrage opportunities, contingent value right opportunities, etc. The idea generation and portfolio construction process follow a proprietary framework the portfolio manager has developed over his investment career. The process starts with the appraisal of the transactional universe, where asymmetrically priced situations (mergers, spin-offs, etc) are systematically identified through quantitative screens. These filters are applied to a restricted opportunity set (about 5 sub-sectors) where alpha potential is deemed to be high (i.e. areas requiring a high level of expertise that are often overlooked by market participants). Each idea is then evaluated by the analyst team/PM who seek to determine whether the company specific 'advantage' created by a transactional event is durable and subject to forecast accuracy. Examples of transactional events include capital raise transactions funding monopolistic business trajectory, asymmetrical merger arbitrage situations with activist tension and high probability of deal terms revision, earnings/tax redomiciliation combined with stockbuild from perspective bidders, etc. On the short side the fund seek to identify businesses where economic displacement can lead to permanent economic impairment. The fund maintain a long book of up to 30-40 positions and 35-50 equities short book, with decent level of concentration. Gross market exposure ranges between 200-260% while net exposure between +/-50%. The fund net exposure is largely driven by bottom-up considerations, although it is actively managed with the fund benefiting from multiple proprietary frameworks including systematic macro systems that alert the portfolio manager to periods of heighted market downside risk. During theses periods hedging is increased to reduce market exposure.