Investor alignment key to fund raising
Adrigo: Best Emerging Manager Fund – Equity Strategies – Aligning investor expectations with managers’ long-term strategy through diligent and insightful communications is critical to overcoming the challenge of attracting long-term capital.
“We have historically been successful in finding hidden gems among Nordic small and mid caps. These names are often overlooked by mainstream investors and poorly covered by brokers,” outlines Staffan Östlin, CIO of Adrigo Asset Management. The firm was acquired by East Capital Group in May 2020 when Adrigo became the group’s absolute return and specialised strategies platform,
Over the course of the past year, the firm increased the number of smaller positions in high growth companies, many of which are true disruptors. This, together with ensuring a close alignment with investor expectations, can help Adrigo meet the challenge of attracting long-term capital.
Östlin comments: “Our “raison d’être” is that we can produce competitive returns while having a lower overall risk compared to the equity markets. Our clients want exposure towards Nordic small caps but they also value capital preservation. We look for good quality companies with high quality or improving ESG standards, and help them along that path.”
Outlining the developments he observed in the market over the course of the year, Östlin says: “The pandemic had some significant effects on the stock markets but also on the way companies operate. As central banks acted swiftly and flushed the market with liquidity, markets calmed down quite rapidly.”
Looking ahead, he would not be surprised to see equity markets moving more sideways, although with significant short-term shifts in sentiment and volatility. “Stock-picking will become increasingly important to generate alpha which suits our strategy very well,” notes Östlin.
The year has also witnessed a giant leap in the use of digital solutions along with the capital markets’ increased focus on sustainability. These trends have served Adrigo well as the firm benefited from having the right exposure to these developments and its core holdings demonstrated resilience.
The Adrigo Small & Midcap long/short fund – which won this year’s Emerging Manager Award for equity strategies – is an actively managed equity hedge fund, targeting absolute returns with a low and controlled risk-return profile. It invests in Nordic Small & Midcap companies. The portfolio normally consists of 25-30 holdings and 15-25 short positions. The net exposure to stocks is between 20-50 percent, with a gross exposure of 170-190 percent .
Delineating its investment approach, Östlin says: “We analyse corporate accounts, meet with managements, and interview people who provide insight into the outlook for a company or industry.
“We seek to establish a view as to whether a stock is under or overvalued and, importantly, to identify catalysts which might drive a revaluation. Our methodology for fundamental research has been successfully applied in both up and down markets.”
Adrigo focuses on its domestic markets when investing, explaining that: “We prefer to dig where we stand, ie, to operate solely in the Nordic region, where our careers have been focused for close to 30 years. This is where we should best understand how things work, and this is where we have our contacts. In our strategy, all investments are in the Nordic region, which we deem the safest place for us to invest.”
Staffan Östlin, CIO, Adrigo
Staffan Östlin (Portfolio Manager and CIO) has a broad and successful background as an analyst and stockbroker with, among others, Carnegie, SEB Enskilda and Handelsbanken. During the years 2006 until 2013 Staffan ran his own business with investments and corporate finance. Staffan’s most recent position prior to joining Adrigo was from a role as Fund Manager at the hedge fund Quest 1, focusing on Nordic Small & Midcap companies.