If I was an accredited investor, the Salida Multi Strategy Hedge Fund is one I would invest in. The hedge fund has a minimum subscription of C$5,000 for accredited investors and has been in existence since November 2004. The hedge fund is RRSP eligible fro Canadian residents and as of April 2008, the class A units were valued at $19.81210 (with a distribution of 6.81763 occurring in December 2007). Management fees are a standard 2% per annum (paid in arrears, monthly) and incentive fees are also in line with peers at 20% of the funds’ profit (paid in arrears, quarterly).
The Salida Multi Strategy Hedge Fund utilizes a number of strategies, some of which include: long/short equity, special situations, merger / risk arbitrage, convertible arbitrage and macro systematic. Some of the sectors the fund focuses on include: Oil & Gas, Base & Precious Metals & Mining, Financial Services, Telecommunications & Media, Industrial Products and Transportation.
The fund is relies on top down macro views to determine sector and strategy selection, while bottom up fundamentals determine equity selection. The fund concentrates its positions on core postions with a developing catalyst while the macro strategies are utilized to capture gains from prices trends in global markets including currency, energy, agriculture, interest rate, metal and equity markets by mechanically responding to market prices, volatility and portfolio risk.
The Salida Multi Strategy Hedge Fund is managed by Brad White. Brad joined Salida Capital at its inception and is a portfolio manager with a strong background in the fundamental analysis of the global energy sector. His skills developed as an equity research analyst mainly for Exploration and Production companies in the global Oil and Gas sector, translated into a solid background for managing merger arbitrage and long-short positions at Salida Capital.
Prior to 2000, Mr. White was formerly with Morgan Stanley Canada Limited, as Vice-President Equity Research where he was responsible for coverage of Canadian exploration and production companies. Mr. White started as a Research Associate with Burns Fry Inc. in 1993. Over the ensuing five years, he progressed to Vice-President Equity Research at TD Securities Inc., where he covered the oil and gas sector. Mr. White sits on the management committee at Salida and has obtained his chartered financial analyst designation.
The fund’s strives to outperform on an absolute basis and has an annualized compounded rate of return of 48.82%, an average monthly gain of 7.71% and an average monthly loss of -5.39%. The fund sports a low correlation of 0.35 with the S&P 500 Price Index and 0.67 with the S&P/TSX Index. On a percentage basis, the fund has had 69.05 winning months with the worst monthly return being -14.47%. If one had invested $10,000 at the fund's inception, that $10,000 would now be worth slightly over $40,000.
Explaining the fund’s negative returns for April (-4.55%) in his investment update, Mr. White writes ““modest gains in base metals and oil and gas stocks were offset by significant losses in gold equities as well as negative returns in uranium stocks and non-resource investments. Other strategies had a positive contribution, with gains in risk arbitrage exceeding a minor negative return from our global macro strategy.”
However, Mr. White continues to stick to his investment theses despite seeing declines in some of his core positions, where he is expecting catalysts in to lock in large gains. He writes “The negative return from these core positions has been despite a very strong backdrop of strong commodity prices and an active environment of mergers and takeovers of similar companies. Whether we could have traded out of our core positions and then re-established them at lower prices in the current market is not relevant. More importantly, we are committed to be in the position to make the major gains on these core holdings that has driven our performance in the past, based on our longer term view of the economic environment and industry segment.”
Ending April 30, 2008 the fund’s compounded 1, 2 and 3 year returns were 1.49%, 25.08% and 45.46% respectively (according to Fund Profiler). I think Mr. White’s performance has demonstrated his ability to outperform the market on an absolute basis and his aggressive growth approach would be a great fit with my investment philosophy (if I ever had one). Now if only I was an accredited investor …
This is not investment advice. It is my personal opinion.
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