The fund, Platinum Nordic, is a joint venture between Platinum Capital and Swedish fund management group Catella Asset Management. It will focus on regions such as Finland, Norway and Sweden using a long and short equity strategy. This will be complemented by ability to hedge using fixed income and index derivatives. The fund will be available to investors with at least £40,000 and is domiciled in the Cayman Islands.
Catella Asset Management has in excess of $3.1bn under management and has a team of 20 experience fund managers. Platinum has built up a relationship with the firm over the last four years, initially because Catella invested a part of its fund of funds portfolio with Platinum.
Catella Asset Management will employ a bottom-up approach to stockpicking, so each long and short position is assessed on an individual basis without reference to any particular country or sector bias. Examples of long positions include Sony Ericsson, H&M and Nordea. Nokia is an example of a short position, reflecting the manager’s opinion that it has lost ground to Sony Ericsson.
Platinum Nordic will not be as concentrated on restructuring stories and takeovers compared with the recently launched Europe select fund. In theory, Nordic’s portfolio could be invested in one sector as there are no constraints. Platinum Capital does not care if the portfolio is overweight in a particular sector as long as the reason Catella is investing in each individual stock is sound and the conviction is strong when buying or selling stocks short.
Platinum Capital is positive on Scandinavian regions because it is experiencing the market inefficiencies and M&A activity that has been going on across wider Europe over the last 12 months. According to Platinum, the trend is for companies to go on buying sprees or sell off divisions it no longer, creating a lot of liquidity and investment opportunities. Generally the share price of a company that has acquired another business goes down, as the market reacts to it taking on more debt to make the purchase., while the company that has been acquired will go up.
Although the Nordic regions may be a very specialist area to invest in, it may help to boost returns in a portfolio that already has European exposure as future growth may already be reflected in the valuations of stocks in some of the European regions.