The fund has had daily dealing since inception in 1999 and Ennismore try to ensure the investor base represents long-term money: approximately 20% of the assets in the fund are in-house or friends and family, while of the external investors roughly 85% have been with the fund since inception. They estimate they can liquidate 75% of the fund in three months. The strategy is a bottom-up one, focusing on firms with good cash flow, and avoiding speculative areas like mining stocks. The companies in the portfolio will have substantial exposure to Europe as businesses. The managers rely on in-house analysis and research and pronounce themselves as very focused on fair value. Various financial metrics are employed to reveal companies that are mis-priced, with discounted cash flow a frequently used methodology. The generation and predictability of free cash flow is considered essential for the analysis of the intrinsic value of European small caps.
The team carries out over 400 company meetings and visits a year and meet with the management of virtually all the companies they invest in. They rarely own over 5% of the free float of a company.
The managers are very aware of the opportunities of their short book and realistic about the limitations sometimes imposed by borrowing stock in the small cap sector. Having said this, they note that it can often be easier to borrow stock in overvalued ‘hot’ stocks.
The fund is not an activist fund per se. The typical holding period for any long investment in the portfolio is between two and three years. Leverage is not used, and bonuses are subject to a three year clawback. The fund is on the verge of a new €70 million capital raising.
About the managers
There are five managers overall, each controlling his own book in the fund, which helps to focus attention on small cap opportunities. Geoff Oldfield, an Ennismore founder director, is joined on the team by Tom Hearn (ex-Baring Asset Management), Leo Perry, Christian Fiesser (the fund’s Germany specialist, based in Frankfurt) and Simon Reid.
Key details
Fund name Ennismore European Smaller Companies Fund
Management company Ennismore Fund Management
Promoter Ennismore Fund Management
Status Open
Inception date 27th January 1999
Strategy
Kind of fund Hedge Fund
Strategy group Long / Short
Region Europe Developed
Asset classes Equities
Particulars
Currency GBP
ISIN IE0004515239
Bloomberg ticker ENNSMCI ID
Domicile Ireland
Listing Irish Stock Exchange
Fund structure Investment Company with Variable Capital
NAV calculation Daily
Liquidity Daily
Notice (banking days) 1
Minimum investment 5,000
Min. investment currency GBP
Fees
Entry fee 0%
Exit fee 2%
Management fee 2%
Performance fee 20%
High water mark Yes
Hurdle rate No
Analysis
Current YTD 9.31%
Annualised return 8.04%
Annualised volatility 9.17%
Sharpe ratio (2%) 0.66
Correlation to S&P 500 -21.03%
Correlation to iBoxx 3.59%
Service providers
Administrator State Street Fund Services
Custodian State Street Custodial Services
Auditor KPMG
