Former Goldman Star Sees Hedge Fund Miss the Mark in Q1

Former Goldman Star Sees Hedge Fund Miss the Mark in Q1

Former Goldman Sachs Group, Inc. (NYSE:GS) Pierre-Henri Flamand hasn’t found much luck in his latest venture as a hedge fund manager. In his first quarter investor letter, he described it as a “frustrating” period, missing out on market rallies.

Flamand, who founded the $1.8 billion Edoma fund, saw a 0.85 percent decline at the end of the first quarter; this brought the fund’s losses to 3.1 percent since its November 2010 inception, reported Reuters.

The fund focuses on corporate events including mergers, bankruptcies and restructurings. For the quarter, funds in this sector have risen, on average, 4.84 percent from data provided by Hedge Fund Research.

So what did Flamand have to say about this quarter? With the demand dictated by “momentum-driven trading” after the system received one billion euros of inexpensive cash by the European Central Bank, it was difficult time for his Global Event Driven Master Fund outside the confines of the United States.

Flamand wrote in his investor letter, “It is important to realize the high likelihood of this trend continuing, and to focus on the few stocks in Europe and elsewhere that have the requisite global growth and liquidity characteristics that asset allocators are favoring right now.”

“This is a key theme for the portfolio which we intend to reflect most strongly in pre-event names.”

Looking ahead, Flamand said he would emphasize a concentrated portfolio of 30 to 40 positions, down from March’s 62.

On a Positive Note…

Flamand noted in the letter that Edoma did make money on European and U.S. financial trades and the restructure play of the International Airlines Group (LN:ICAG.L), the British Airways parent group. The commodity market’s volatility also enabled the fund to achieve its key mining position.

The fund’s net exposure, defined as difference between its long and short positions, sat near 20 with the greatest positions in European basic materials, U.S. energy and European consumer non-cyclical names, reported Reuters.

Flamand noted the fund is ready for more deals in the upcoming months with more than 40 percent of gross exposure in the “pre-event” bucket.

In a nod to a recent event, the firm has just opened an Avon Products (NYSE:AVP) position after the news of the Coty offering according to the investor letter.

Flamand also said for the year, he sees default rates for leveraged loans to stay at the low 3 to 4 percent.

He added, “The key driver of this low default rate is extremely low interest rates, good liquidity profiles and minimal debt amortization requirements across the market in 2012. This should be an environment that is attractive for long risk in credit in Europe.”


Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 4/30/2020 or after the next 40 subscribers take advantage whichever comes first – please do not share this discount with others