Dublin firm launches European long/short fund

Merrion Investment Managers has launched a new Ucits III European Absolute Return fund to be run by a fund manager duo hired from Pengana Capital.

Michael Nicol and Alistair Campbell ran a European long/short strategy together at Pengana before joining Merrion in April 2010.

'The Merrion European Absolute Return Fund is designed to provide investors with the absolute return characteristics of a hedge fund plus the transparency and daily liquidity of a regulated Ucits product. It enables investors to access the proven stock-picking skills of an experienced long short equity team on a tried and tested administrative platform,' said Merrion director Kevin Gallacher. 

In the past ten years Nicol's funds have not had a single year of negative returns, according to Dublin-based Merrion, which runs approximately €1 billion in specialist investment strategies, mainly for institutional investors..

The duo's new Newcits fund, which has been seeded with $20 million, will target an absolute return of 15%-20% per annum with an annualised volatility of between 7.5% and 10%.

Nicol and Campbell's approach is based around detecting mispriced stocks through bottom-up analysis, focusing on understanding firms' business models, earnings drivers and risks. The timing of the their decisions is made by recognising valuation anomalies and catalysts likely to lead to a re-rating or de-rating.

'During the last ten years, global equity markets have entered a more volatile and less certain environment for returns. Our investment process has delivered consistent positive absolute returns with low volatility in both rising and falling markets. Perhaps most importantly, it operates with low levels of leverage and does not need to be adapted or compromised to comply with Ucits regulations,' said fund manager Nicol, who previously worked at SVM and Blairlogie during his 25 year career.