Magnum Global Investments is sponsoring a new offshore hedge fund whose strategy in its US limited partnership yielded net returns of 37.4 per cent last year and has gained 19.4 per cent y
Magnum Global Investments is sponsoring a new offshore hedge fund whose strategy in its US limited partnership yielded net returns of 37.4 per cent last year and has gained 19.4 per cent year in the first four months of 2008.
The Crestridge Capital Offshore Fund capitalizes on the use of so-called ultra ETFs along with individual stocks, both long and short, to enhance returns, while also employing covered options to limit the impact of market and event risk.
Sixty-four percent of its profits in 2007 came from short ETFs, 24 per cent from being long stocks and options, seven per cent from shorting stocks and options, and five per cent from being long ETFs.
‘Our edge is the ability to quickly identify, both fundamentally and technically, a shift in market conditions and then respond to it profitably through our trading,’ says Jason Allen, a chartered financial analyst with 11 years experience as a research analyst and portfolio manager, who co-manages the fund.
The fund takes advantage of mispricings in the market and individual securities due to a number of factors, including overreaction to events that cause irrational movements. ‘The implicit assumption is that this mispricing will persist or increase, which creates profitable buy and sell opportunities for the fund,’ Allen says.
Allen previously co-founded and managed an Atlanta-based hedge fund that generated 52 per cent total net return between 2003 and 2005. His co-manager, Joe Tracy, has 15 years’ experience as an equity trader and portfolio manager, including three years at SunTrust Robinson-Humphrey.
In the nine months that the Crestridge strategy was in place in 2007, the fund had no losing months and outperformed the S&P 500 more than tenfold, gaining 37.4 per cent compared with the benchmark index’s 3.5 per cent.
Founded in 1994 by its chairman, Dion Friedland, Magnum focuses on identifying and sponsoring leading hedge funds.