Midmar is a specialist UK-based long/short equity firm set up by Alistair MacDonald and Michael Nicol along with Kevin Gallacher, former managing director of Merrion Investment Managers.
The fund follows a purely bottom-up strategy with no geographical or sectoral overlay. The managers are used to running larger funds (Nicol previously managed a €600 million portfolio and has over ten years equity long short experience); they gravitate towards large mid-cap and large cap stocks. Liquidity is partly assessed on the basis of average 30 day trading volumes. Risks are measured using a top down approach: individual losing positions are not automatically cut. They can be reviewed as part of a larger exercise, for example by scrutinising the possible correlation of ideas in the portfolio. A proprietary risk management system is used to insulate the fund from over-sensitivity to market direction.
“We want to avoid using one theme with no plan B, “ explains portfolio manager Michael Nicol. “We have to avoid loading up too far on one theme. It helps us to rationalise our stock picking.”
Instead the managers express a variety of mini-themes, for example luxury cars or mining. The more uncorrelated the ideas, the better. This can be expressed on both the long side and the short side.
In keeping with other funds in the UCITS Hedge database, this fund has an actively managed short book composed of individual positions. For example, during October 2010 shorts in UK housebuilders were amongst the best performers in the portfolio during a rising market.
The fund maintains a fairly concentrated portfolio of between 30 and 40 highly liquid stocks. Normal position size is 2 to 6% longs and -2 to -4% shorts.
About the managers
Michael Nicol and Alistair MacDonald both have track records as equity analysts and fund managers stretching back 25 years. Both have worked on European portfolios, and MacDonald has also worked in Asia, with a stint in Australia at First State and Perennial Partners. Both worked at Pengana Capital before they established Midmar Capital in 2010.
Key details
Fund name Merrion European Absolute Return Fund
Management company Merrion Investment Managers
Promoter Merrion Investment Managers
Status Open
Inception date 16th October 2010
Strategy
Kind of fund Hedge Fund
Strategy group Long/short
Region Europe All
Asset classes Equities
Particulars
Currency EUR
Share class name EUR B
ISIN IE00B5450N81
Bloomberg ticker MERCEAR 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 250,000
Min. investment currency EUR
Fees
Entry fee 0%
Exit fee 0%
Management fee 1.5%
Performance fee 20%
High water mark Yes
Hurdle rate No
Analysis
Current YTD 9.52%
Annualised return 23.98%
Annualised volatility 17.26%
Sharpe ratio (2%) 1.27
Correlation to S&P 500 -0.84%
Correlation to iBoxx 6.40%
Service providers
Administrator Northern Trust International Fund Administration Services
Custodian Northern Trust Fiduciary Services
Auditor KPMG
Lawyer McCann Fitzgerald
