Dexion Capital and JC Clark have announced the opening of the JC Clark Focused Opportunities Offshore fund, which seeks absolute returns through a classic long-short hedged style, to exter
Dexion Capital and JC Clark have announced the opening of the JC Clark Focused Opportunities Offshore fund, which seeks absolute returns through a classic long-short hedged style, to external investors starting on November 1. The fund’s strategy is in line with that of an existing Canadian onshore vehicle, the Focused Opportunities Fund.
Toronto-base JC Clark manages some CAD300 million in predominantly Canadian long/short equity strategies, as well as in long-only and short-only investment pools, through a hands-on fundamental research process that emphasises security selection as the key attribution factor.
The Focused Opportunities Fund was launched in June 2005 to invest in a concentrated selection of the firm’s most promising investment ideas, while avoiding directional macro bets on the market. It is up approximately 49.6 per cent since launch, with an annualised return of 18.8 per cent.
Over this period, the fund has maintained an average net market exposure of approximately 40 per cent, while its beta-adjusted net exposure has averaged 20 per cent. The correlation with broad equity benchmarks has been modest – using weekly data, it is currently 0.27 with the S&P/TSX [Toronto Stock Exchange] Composite Index.
All investments are made in publicly-traded securities, mainly equities. The manager holds high-quality companies trading at a significant discount to intrinsic value and shorts those with weak fundamentals, poor or overly-promotional management, or aggressive accounting. JC Clark continues to find many opportunities for long and short investments in the Canadian market, particularly in the under-followed mid-cap segment.
‘Now is a great time to invest long/short in the Canadian market,’ says Colin Stewart, portfolio manager of the JC Clark Focused Opportunities funds. ‘The fiscal position of the country is strong, the economy remains healthy, and the size and liquidity of the TSX continues to increase. Despite these strong macro fundamentals, structural inefficiencies persist and can be exploited by those in a position to conduct extensive bottom-up research.’
Rory Hills, co-head of Dexion Capital’s single manager marketing, says: ‘Colin and his team at JC Clark have a remarkable track record as stock pickers, and the infrastructure and standing necessary for success in Canada. We have been impressed with their ability to generate great returns without relying on hot sectors such as natural resources.’
The minimum initial investment is USD1m with monthly redemptions subject to 90 days’ prior notice. The capacity limit will depend on liquidity, but is projected to be USD500m. Management fees are 2 per cent per cent of net assets per annum and the performance fee is 20 per cent of net realised gains, with a high water mark.
The fund is structured as an open-ended investment fund incorporated in Barbados. The prime broker and custodian is National Bank Financial, the administrator is Swiss Fund Services, the auditor is Deloitte & Touche, the legal advisor is Ogilvy Renault, and the distributor is Dexion Capital.
JC Clark Investments was founded by Stewart and John Clark, previously a co-founder of Connor, Clark & Lunn and a former chairman of the Toronto Stock Exchange. JC Clark’s first fund, the Preservation Trust, was launched in April 1999 and has a compounded annual return of approximately 15.2 per cent over 101 months.
Dexion Capital was established in 2000 and researches, develops and markets hedge fund products to an international institutional investor base. It has three main lines of business, advisory, exchange-traded funds of hedge funds, and single manager marketing. The advisory business rests on an in-depth knowledge of the fund of hedge funds universe and a proprietary database of about 550 fund of hedge funds managers or groups and 1,500 products.
Dexion Capital (Guernsey), established in 2002, manages about USD2.5bn in four exchange-traded funds of hedge funds: Dexion Absolute, launched December 2002 and with USD1.73bn in assets; Dexion Equity Alternative, launched in April 2004, and with USD309m in assets; Dexion Trading, launched in November 2004 and with USD193m; and Dexion Alpha Strategies, launched in April 2006 and with USD267m. Dexion Absolute is the world’s largest exchange-traded fund of hedge funds and a member of the FTSE 250 Index.
Dexion’s third party marketing business was launched in 2002 and has raised more than USD1bn in assets from its offices in London and Greenwich, Connecticut. It works via long-term partnerships with a small selection of managers that have an interesting and repeatable process, demonstrated money-making skills, relatively low correlation to other strategies, and an institutional-quality set-up and infrastructure.