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Acuitas launches long/short equity strategy

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Acuitas Investments has launched a long/short equity strategy aimed at delivering high absolute returns with low correlation to equity markets by building on the firm’s expertise in researching microcap and small cap managers.

The firm’s investment philosophy centres on exploiting the return opportunities available in the least efficient areas of the equity markets.
“Underfollowed areas of the equity markets such as microcap offer opportunities for skilled investors to generate an information advantage and deliver strong returns. This is the basis for Acuitas’s exclusive focus on microcap and small cap markets globally. Implementing in a long/short strategy enhances managers’ ability to exploit these return opportunities through their ability to short,” says Chris Tessin, Managing Partner at Acuitas.
With equity volatility rising, but many investors expecting lower returns from traditional investments, Acuitas believes market participants are increasingly looking for unique sources of returns with less volatility and low correlations to their existing portfolios. The firm’s long/short product is a multi-manager strategy intended for plan sponsors, endowments, wealth managers, and other institutional investors. It will be offered in a commingled vehicle as well as in separate accounts for larger investors.
Acuitas’s research indicates that microcap and small cap stocks remain an “undiscovered” asset class. According to the firm, of the estimated 5,200 publicly traded securities with market caps under USD1.5 billion and at least USD500,000 average trading volume traded globally, over 60 percent have no sell-side analytical coverage. Acuitas believes this gives skilled professional investors an opportunity to generate an informational advantage that will result in strong returns.
“In the inefficient areas we target it is critical to identify great managers early in their life cycle when assets are low and their ability to generate returns is the greatest,” says Dennis Jensen, the company’s Director of Research. “Offering a return-focused long/short product with limited net market exposure is a natural extension of the work we do for our existing strategies, as we have been researching long/short managers as part of our investment process since our founding in 2011.”
To identify potential managers, Acuitas employs a fundamental research process supplemented by quantitative analysis, while also taking into account the unique qualities of the capacity-constrained asset classes. The research includes a comprehensive analysis of the manager’s investment process, philosophy, management team, and risk controls.
“Our goal is to identify strong, alpha-focused managers before they turn up on other institutional investors’ radar screens,” adds Jensen. “We’ve done this with our long-only products, and we utilise this same approach in the long/short space.” 

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