Upload
phuc-nguyen
View
31
Download
0
Embed Size (px)
Citation preview
This is not an offering or a solicitation of an offer to purchase an interest in the fund.
Any such offer or solicitation will be made only by means of a final offering
memorandum of the fund and only in those jurisdictions permitted by law.
2
Fund Philosophy
Fundamental value is the primary driving
force underlying investment returns
The best place to consistently find value is
in under-followed companies
3
We Focus on
Under-Followed Companies
Companies that are not monitored by research analysts present outstanding investment opportunities
The market often misprices under-followed companies; this presents opportunities to buy stock at a discount to
intrinsic value
Brokerage firms have sharply reduced research staffs due to reduced commissions and the inability to pay analysts
for investment banking deals
This has resulted in a significant reduction in the number of companies that have quality research coverage,
especially among companies with smaller market caps
4
The Abacab Advantages
People
Performance
Process
5
The Abacab Team
Ron Weinstock
Portfolio Manager
Experienced hedge fund manager
Over 20 years of investment experience
Former risk arbitrage trader for Lehman Brothers
Managed $400 million-dollar portfolio at MD Sass
Education:
B.S. Yale University
Ph.D. candidate (mathematics) University of Chicago
6
The Abacab Team
Brad Zarlin
Head Trader
Experienced hedge fund manager
Over 20 years of investment experience
A top trader at a brokerage firm with over 13,000 brokers
Managed brokerage office for Wachovia
Education:
B.S. The Wharton School, University of Pennsylvania
M.B.A. University of Chicago
7
The Abacab Team
William Buchsbaum
Managing Director
Experienced hedge fund manager
Practiced law in London, specialized in aircraft financings
General Counsel for high-tech start up
Raised significant venture capital for start up
Education: B.A. University of Pennsylvania
J.D. University of Texas
LL.M. The London School of Economics
8
90
95
100
105
110
115
120
125
130
135
140
145
150
155
Ja
n-1
3
Fe
b-1
3
Ma
r-1
3
Ap
r-1
3
Ma
y-1
3
Ju
n-1
3
Ju
l-1
3
PERFORMANCE 2013 ABACAB
S&P 500
9
9095
100105110115120125130135140145150155160165170175180185190195200205210215220225230235240245250
Ja
n-1
0
Feb
-10
Ma
r-10
Ap
r-10
Ma
y-1
0
Ju
n-1
0Ju
l-10
Au
g-1
0
Se
p-1
0O
ct-
10
No
v-1
0D
ec-1
0
Ja
n-1
1
Feb
-11
Ma
r-11
Ap
r-11
Ma
y-1
1
Ju
n-1
1Ju
l-11
Au
g-1
1
Se
p-1
1O
ct-
11
No
v-1
1D
ec-1
1
Ja
n-1
2
Feb
-12
Ma
r-12
Ap
r-12
Ma
y-1
2
Ju
n-1
2Ju
l-12
Au
g-1
2
Se
p-1
2O
ct-
12
No
v-1
2D
ec-1
2
Ja
n-1
3
Feb
-13
Ma
r-13
Ap
r-13
Ma
y-1
3
Ju
n-1
3Ju
l-13
PERFORMANCE 2010 - 2013 ABACABS&P 500
10
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
460
480
500
520
540
560O
ct-
01
Jan
-02
Ap
r-02
Ju
l-02
Oct-
02
Jan
-03
Ap
r-03
Ju
l-03
Oct-
03
Jan
-04
Ap
r-04
Ju
l-04
Oct-
04
Jan
-05
Ap
r-05
Ju
l-05
Oct-
05
Jan
-06
Ap
r-06
Ju
l-06
Oct-
06
Jan
-07
Ap
r-07
Ju
l-07
Oct-
07
Jan
-08
Ap
r-08
Ju
l-08
Oct-
08
Jan
-09
Ap
r-09
Ju
l-09
Oct-
09
Jan
-10
Ap
r-10
Ju
l-10
Oct-
10
Jan
-11
Ap
r-11
Ju
l-11
Oct-
11
Jan
-12
Ap
r-12
Ju
l-12
Oct-
12
Jan
-13
Ap
r-13
Ju
l-13
PERFORMANCE SINCE INCEPTION ABACABS&P 500
11
Performance
Since Inception 450.5%
2013 (through June) 45.1% 2012 3.1% 2011 14.1% 2010 42.0% 2009 56.2% 2008 -49.8% 2007 44.3% 2006 6.8% 2005 30.7% 2004 52.6% 2003 -4.8% 2002 -2.9% 2001 (4th Quarter only) 1.2%
12
Fund Style
Long-Short Equity Fund
Minimal Leverage
Smaller Market Capitalizations
No Fixed Industry Focus
13
Fund Style
Long-Short Equity Fund
Long Bias (typically):
80% Long
20% Short
Portfolio:
Stocks: 90% USA, 10% International
Minimal Options
No Other Derivatives
14
Fund Style
Minimal Leverage
Margin borrowing less than 10%
15
Fund Style
Market Capitalization No bias as to size
Nonetheless smaller companies are often more attractive investments than large companies because they are:
- less well-followed
- less well-understood
Portfolio Composition by Market Cap: < $100 million 45% $100 million $250 million 23% $250 million - $500 million 5% $500 million - $1 billion 12% > $1 billion 15%
16
Risk Management
Diverse Portfolio 71 different long positions
Short Positions Partially to generate absolute returns Partially to hedge long positions
Minimal Leverage No more than 10% margin Infrequent use of derivatives
Qualitative Fundamental Analysis Margin of safety Evaluation of management, technical personnel, financials,
business plan, industry
17
Multiple Strategies
Eclectic & Opportunistic
No single strategy appropriate for all situations
-Fundamental Value
-Financing Singularities
-Quality Based Shorts
-News Flow
18
Fundamental Value
Discount to intrinsic value Proprietary valuation metrics Traditional valuation metrics Margin of safety
Deep independent research Industry Company
Product Management Insider buying and selling
19
Financing Singularities
Discontinuities in flows of funds can create
significant investment opportunities
-Warrant or option expiration -Merger closings
-Partial tenders
-End of lock-up periods
-Spin-offs
-Year-end
20
Quality Based Shorts
Shorting
Look for qualitative flaws
Overvaluation
however overvaluation alone is not reason enough to short
Heavily touted by low quality underwriters
21
News Flow
News coverage can affect stock price
Typically we short a stock in anticipation of partial reversal of price rise caused by
favorable press coverage
Usually these positions held < 3 weeks
Case Study
Ashford Hospitality Trust (AHT), a REIT which invests in hotel real estate, they have quality properties such as Hiltons, Sheratons and Marriotts
Applying the right analytic methodology at the correct point in a particular REITs life cycle is critical. Key distinction usually overlooked: older REITs and newer REITs require different analysis
When analyzing mature REITs we primarily use asset based valuation rather than current cash flow valuation (only appropriate for new REITs)
AHT was a mature REIT with underperforming properties, cash flow was down and the stock price was down
We bought AHT in late 07 and early 08 for an average price @ $6.90
AHTs management also knew the stock was undervalued. Their aggressive buyback program enhanced our returns
We sold in the summer of 2011 for an average price of @ $12.50 Return: 81%
23
Case Study
Sportsmans Guide (SGDE), a catalog retailer of apparel and equipment for hunting, fishing, hiking and golf
SGDEs operating margins on traditionally generated sales were zero, on internet sales 13%
Turnaround plan: reduce number of catalogs mailed, shift order acquisition to internet where costs are much lower
Our analysis enabled us to understand before the market did that SGDEs turnaround had succeeded: its growth in internet sales would have an ongoing positive impact on profitability
We started buying SGDE in September 2003 @ $8.75
In September 2006, SGDE was acquired for $31.00
Return: 254%
24
Case Study
Hansen (HANS), a beverage producer
HANS was a regional producer of fruit juices and natural sodas; company had years of modest profits and low growth
In 2002 introduced Monster Energy Drink, which gained strong market share in peak summer season of 2003, after the summer Monsters sales continued to be strong, although masked by expected seasonal decline
Energy drinks are much cheaper to produce than juices
Shift in product mix to energy drinks indicated that operating margins would improve substantially
We bought HANS in 4th Quarter 2003 @ $4
By February 2005 HANS no longer undervalued, sold @ $20
Return: 400%
25
Conclusion: Keys to Success
Different Perspective
Focus on under-followed companies
Independent research and analysis
Contrarian
Non-correlated performance
People & Experience
Investment professionals with over 60 years cumulative experience
26
Fund Details
High water mark
6 month lockup
$250k minimum investment
1% Management Fee
20% Performance Fee
Prime Broker: Goldman Sachs Execution & Clearing
27
Address
Abacab Asset Management 324 W. 83rd Street
Suite 5W
New York, NY 10024
Contact Information
Vietnam: Hien Vu
USA: William Buchsbaum
28