Swiss Investment Managers (SIM) is launching a hedge fund it claims is the first in Europe and the US to exclusively employ the Director Dealings methodology.
The Directors’ Dealings Fund (DDF) will base its long or short investment decisions solely on publicly-announced reports of transactions by company directors and senior management who are using their own money to buy or sell equity in the firms.
It will be managed by Athanasios Ladopoulos, and George Muzea, who is widely considered the pioneer of the so-called Director Dealing and Corporate Insiders Transactions strategy.
Athanasios said the fund uses the Director Dealings methodology so as not to contaminate what the managers consider the most pure indicator of how the business is performing.
“Directors and executive management team members generally know more about the companies they manage than outsiders, such as broker analysts or fund managers,” he said.
“When directors and executives buy significant amounts of shares, that is a strong signal something good will happen. Conversely, when they sell significant amounts of shares, it is a signal of tough times ahead.
“DDF combines intellectual capital with proprietary investment management mechanisms to analyse such activities and is well placed to take advantage of these dealings.”
The fund monitors transactions in mid- to large-cap European (80%) and US (20%) companies, and out of 1,000 transactions only about 10 pass the qualifying criteria.
Typically, it executes one trade for every 1,000 with an investment horizon ranging between one month and seven months.
The alternative investments house said the Luxembourg domiciled Specialised Investment Fund (SIF/FIS) will target low volatility and risk-adjusted returns of 15%.
It will not use leverage or derivatives and will have no associated collateral risk. It is aimed at high net worth investors, family office and institutional investors, carrying a minimum investment of €200,000.
The fund will be capped at between €500m and €2bn.
Figures below analyst expectations
Strategy to grow Solutions business
Dollar denominated assets reach £83m
Recent market volatility adds to uncertainty