Thames River Capital has established the Thames River Edo fund, a long and short hedge fund that is structured as an offshore Oeic.
The fund invests in Japanese companies and will take long positions on companies that look likely to perform well, while going short on companies that look likely to fall in price.
Thames River Capital believes that although the Japanese market has been depressed for some time, there are still opportunities for hedge funds. It points out that some companies are restructuring, while others are not, enabling this fund to exploit the discrepancy between the two.
Rod Birkett and Huw Llewellyn will jointly manage the fund. Birkett has 20 years' investment experience, including 13 years specialising in Japanese equities, and Llewellyn has 23 years' experience of managing Japanese equities.
The fund will have a bias towards mid-caps because Thames River Capital thinks these companies are less researched than large caps and represent the ideal trade off between opportunity and liquidity. However, the fund managers may decide to take long or short positions in larger and smaller companies.
Between 40 and 80 stocks will be selected for the portfolio and these will be chosen through a combination of top-up and bottom-down approaches. The top-down analysis will look at the rate of growth in the Japanese economy and factors such a government spending, interest rates, the political environment and the level of the Yen relative to other currencies. The bottom-up analysis will look at individual companies in terms of earnings growth, cash flow and quality of management.
This fund is likely to be of interest only to sophisticated high-net-worth investors due to the high minimum investment and the bleak outlook for Japan.