Swiss Investment Managers (SIM) will launch the Directors Dealings Fund (DDF) in September, the first hedge fund in Europe and the US investing solely in the reported share dealings of company directors and senior corporate executives in their own firms.
Investing in listed companies, DDF will base its long or short investment decisions on publicly announced reports of transactions by company directors and senior management who are using their own money to buy or sell equity in their own firms.
SIM’s fund managers will employ a counterintuitive approach, using a contrarian interpretation of directors’ and managers’ share dealings. The strategy has a low 0.2% to 0.4% correlation to equity capital markets and targets low volatility with strong risk-adjusted returns, generating real alpha. The fund is aiming for a risk-adjusted return of around 15%.
DDF is managed by Athanasios T Ladopoulos (pictured), a partner in Swiss Investment Managers, supported by George Muzea, who is considered the “father” of the so-called Director Dealing and Corporate Insiders Transactions strategy, acting as senior advisor. It is a ‘specialised investment fund’ (SIF / FIS), registered in Luxembourg with the CSSF.
The fund will not use leverage or derivatives and thus will have no associated collateral risk. It will invest in large- and mid-cap European and US companies enabling liquidity terms which are expected to make it highly appealing to a broad range of eligible high net worth individuals (HNWI’s), family office and institutional investors.
“Directors and executive management team members generally know more about the companies they manage than outsiders, such as broker analysts or fund managers,” says Ladopoulos. “When directors and executives buy significant amounts of shares, that’s a strong signal something good will happen. Conversely, when they sell significant amounts of shares, it’s a signal of tough times ahead. DDF combines intellectual capital with proprietary investment management mechanisms to analyse such activities and thus is well placed to take advantage of these dealings.”