JO Hambro Capital
JO Hambro Capital Management | Notes
The following piece on JO Hambrol Capital Management Ltd. is being published as part of our daily effort to track hedge funds in the industry. To review other hedge fund research notes please see our Hedge Fund Tracker Tool.Resource #1: (11.17.08) JO Hambro Capital Management Ltd., which oversees about $3.5 billion of assets, will close one of its two hedge funds after a bet against Volkswagen AG shares backfired, people familiar with the situation said. The fund is one of the first to be shut by the trade.
The $240 million Trident European Fund dropped 25 percent in October, its worst month since starting a decade ago, after a bet on a drop in Volkswagen shares went awry, said the people, who declined to be identified because the firm doesn't disclose returns. The fund has slumped 39 percent this year after posting average returns of 8.4 percent annually since its inception. Fund manager Basil Postan didn't return calls seeking comment.
Dozens of hedge funds suffered losses last month when Volkswagen shares surged fourfold after Porsche SE said it had options allowing it to raise its stake in the carmaker to 75 percent. Porsche's announcement forced short-sellers to cover positions in a so-called short squeeze, where investors who had sold borrowed shares rushed to buy them back to limit losses. Volkswagen had been the most shorted stock in Germany's benchmark DAX Index.
``For a highly competitive space like the European equity long-short strategy, being down 40 percent for the year is probably fatal,'' said Taco Sieburgh Sjoerdsma, director of research at Liability Solutions, a hedge fund consultant. ``Attracting new capital would be challenging, redemptions would rise, and there would be no performance fees due for a long period of time.'' Source
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