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Juno Mother Earth founder departs to launch Vertus Capital Partners

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Juno Mother Earth Asset Management co-founder Joseph Di Virgilio has quit as an equity portfolio manager at the firm to establish New York-based Vertus Capital Partners with Craig and Derm

Juno Mother Earth Asset Management co-founder Joseph Di Virgilio has quit as an equity portfolio manager at the firm to establish New York-based Vertus Capital Partners with Craig and Dermot Coughlan.

Di Virgilio will be chief investment officer of Vertus, which will manage the Vertus Sustineo Fund, a global long/short equity hedge fund focused on alternative energy, water, and food and agriculture.

The fund seeks to benefit from rapid worldwide expansion in the alternative renewable energy sector and the increasing role of natural resources in economic processes. These areas are experiencing wide-ranging changes due to soaring demand from emerging economies as well as tightening oil and natural gas production and supply outlooks.

Di Virgilio was involved in the establishment of Juno Mother Earth Asset Management in mid-2006 and the assembly of partners to manage the commodity portion of the firm’s funds. He was also responsible for management of the 30 per cent proportion of the firm’s assets devoted to equities.

‘Unlike my prior fund, this fund will not have a commodities component,’ he says. ‘This will not be a hybrid product. Many investors appreciate uncorrelated returns, but are also learning that the commodity futures space is crowded and highly leveraged, thus subject to significant contango, backwardation, and the disruption in cost of carry rationales. This was a major contributing factor in my decision to invest 100 per cent in equities.’

Dermot Coughlan says: ‘We are seeking consistent returns with minimal risk and volatility. The volatility in commodity futures markets can be extreme and often based on premature assumptions of weather patterns, geo-political events and media coverage.

‘Joseph cannot predict the weather, but he will continue to analyse competitive positioning and advantages, free cash flow, prospects for sales and earnings growth, as well as the overall financial strength of publicly-traded companies. This way, our investors can benefit from the emerging market demand story and the commodities super-cycle without direct exposure to futures.’

Di Virgilio says institutions are looking for ways to gain exposure to alternative and clean energy, but some of the funds participating are suffering from the current market volatility. ‘Many funds are participating in this sector, but some are betting on stocks going up all the time,’ he says. It simply doesn’t work that way.’

He believes there are attractive opportunities within his sectors on the short as well as the long side. ‘We will assume short positions in stocks and sub-sectors with weaker fundamentals and rich valuations, he says. ‘In addition to our core long positions, we plan on being active with short-term opportunities to protect positive performance, generate alpha and maximise returns.’

Di Virgilio previously spent more than 14 years on Wall Street in areas including energy investment banking and asset management. In 2002 he began working for Kenneth L. Fisher of USD45bn asset manager Fisher Investments, an expert in the field of behavioural finance. He then joined Prudential Investment Management as part of a team that managed the Jennison Natural Resources Fund.

The Vertus Sustineo Fund is due to launch in coming weeks and expects to raise some USD100m by year-end. Goldman Sachs is prime broker and Concept Capital is fund administrator, Tannenbaum Helpern Syracuse & Hirschtritt and Walkers represent Vertus Capital Partners in the US and the Cayman Islands respectively.

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