Wed, 15/02/2006 - 00:30
Alternative investment company ALTIN's strong performance in 2005 (+9.01 per cent) has continued into January with the firm up +6.20 per cent for the month.
According to the company, its unique portfolio, which combines a strong core of blue chip hedge funds with a group of smaller, niche managers, has helped it widely outperform funds of hedge funds in general, with the HFR Fund of Funds Composite Index up +7.33 per cent in 2005).
During last year, ALTIN's share price increased +2.08 per cent, a rise which did not fully reflect the increase in NAV, thus causing the discount to slightly widen to 11.45 per cent at year-end. However, the stock price has performed strongly this year (+12.65 per cent as at 9 February 2006), thereby reducing the current discount to 6.83 per cent.
Despite a first semester that proved challenging for most arbitrage strategies, ALTIN's exposure to Long/Short Equity and Macro managers allowed it to quickly recover in the second half of the year.
Launched in December 1996, ALTIN is now in its 10th year of existence and is one of the longest-standing alternative investment companies listed on a stock exchange,' says Eric Syz, delegate of the board. 'Since inception, ALTIN has delivered a cumulative performance of +134.04 per cent and an annualised return of +9.72 per cent (as at 31 January 2006), making it an excellent long-term investment and a very useful tool for improving the overall results of a diversified portfolio.'
The company believes the 'superior' results were achieved by combining a strong core of renowned star managers which are now closed to new investors, accounting for over 80 per cent of the ALTIN portfolio, with a diversified pool of innovative smaller managers that provide a boost to performance by exploiting new strategies and geographical regions. This allows ALTIN to tilt its portfolio as required towards strategies expected to outperform.
NAV performance ALTIN (NAV) HFR FoF Composite Index
YTD (as at end January 2006) +6.20% +2.64%
2005 +9.01% +7.48%
Cumulative since Dec 1996 +134.04% +99.62%
Annualised since Dec 1996 +9.72% +7.83%
Listed on the Swiss stock exchange (SWX) since its inception in December 1996, ALTIN has also been listed on the London Stock Exchange since December 2001.
'ALTIN foresaw the demand for funds of hedge funds in the UK and, in 2001, was one of the first to list in London. Attracted by the combination of strong investment performance and daily liquidity, UK investors now represent approximately 40 per cent of the shareholders,' explains Syz. 'London is a very active market for closed-end investment companies and ALTIN has developed a loyal shareholder base in the UK.'
One of hedge funds' distinctive characteristics is that, as their managers are mostly remunerated on performance, top funds tend to close their doors to new investors once their size begins to impair returns. By investing in ALTIN, investors can gain access to some of these top-performing blue chip managers that have been in the ALTIN portfolio for some time. As of end December 2005, 80 per cent of ALTIN's assets were invested in such funds. Furthermore, ALTIN's closed-end fund structure means that the capital base is fixed and does not dilute the returns of these positions, as is the case with open-ended investment funds.
As of December 2005, the largest allocation in ALTIN's portfolio was to Long Short Equity managers active in the US, Europe, Emerging Markets and natural resources sector (40.9 per cent). Relative Value strategies were the second largest allocation (27.4 per cent), divided between Distressed Securities, Event Driven and Fixed Income Arbitrage. Macro Trading represented 20 per cent and CTAs amounted to 6 per cent. The key change in 2005 was a reallocation from convertible arbitrage and multi strategy arbitrage to Long Short Equity Europe, Emerging Markets and Japan. ALTIN recently marginally added to its Macro exposure and took some profits from directional commodity and energy-sensitive Long/Short funds.
At the end of December 2005, the ALTIN portfolio remained comfortably diversified with positions in 44 funds.
As the market did not fully take into account the recovery in ALTIN's portfolio in the second half of 2005, ALTIN's stock price has not entirely followed the NAV in its upward path (+2.08 per cent for the London stock price in 2005). As a consequence, the difference between the share price and the NAV per share slightly widened to 11.45 per cent at year-end (ALTIN London share price of USD 49.00 as at end December 2005 compared to estimated NAV per share of USD 55.34). However, a change of trend occurred in 2006 and the stock price has performed strongly in the year to date (+12.65 per cent as at 09.02.2006), thereby reducing the current discount to 6.83 per cent. The Board remains strongly committed to maintaining the share price as closely in line with the NAV.
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