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Saturday June 23 2018
 
Magnum Unveiling Two New Single-Manager Funds

By Susan L. Barreto, Senior Reporter

Tuesday, November 23, 2004

 

 

NASSAU, Bahamas (HedgeWorld.com)—Next month Magnum Global Investments is launching two new offshore hedge funds growing its offering pool to five hedge funds that are now actively marketed by the firm.

 

Both funds will be long/short in nature, exploiting various segments of the U.S. stock market. The Chaparral Offshore Fund will focus on positions among industries, while the Aptus Capital Offshore Fund will seek potential dependent on small-cap and midcap growth companies.

 

With a little less than US$250 million in assets under management, Magnum Global Investment plans to launch the funds with US$1.5 million to US$3 million in assets in each, said David Friedland, president of Magnum U.S. Investment, Aventura, Fla.

 

The Chaparral fund will launch on Dec. 1 and is structured to profit from identifying the strongest and weakest industries and taking on long and short positions based on fundamental analysis. Officials at Dallas-based GP Asset Management, who are co-sponsoring the new fund with Magnum, plan more than 50 positions in the portfolio when fully invested.

 

An options strategy also will help reduce volatility by using covered calls and puts with typically a one-month expiration date, and using puts and calls as a hedge. The fund is expected to be 65% to 70% delta neutral.

 

The fund's manager is Thomas E. Hayden, who has been a Nasdaq market maker for 12 years. He co-manages the fund with Bruce Schmidt, who was part of the investment management teams for several American Century mutual funds from 1990 to 1997.

 

On the long side, the fund will look for both value and growth characteristics. Companies with income statements leveraged so that a majority of incremental revenue growth falls to the bottom line or with price/earnings multiples at a discount to their growth. On the short end the fund will apply a "torpedo" ratio to find companies whose receivables and inventories are accelerating at a rate greater than revenues.

 

A proprietary technical model will help Messrs. Hayden and Schmidt pinpoint market entry and exit points.

 

"Due to our low standard deviation, our Value at Risk suggests there is a 1% chance that a monthly drawdown will be equal to or be greater than 2.75%," said Mr. Hayden in a statement.

 

The second fund Aptus Capital Offshore Fund will begin trading in December with an emphasis on U.S. small-cap and midcap growth stocks, limiting risk through shorting selectively across all market caps.

 

Fund manager John M. Romero will use both fundamental and technical analysis in his stock selection process. Risk will be tightly managed in the portfolio and holdings will remain divided evenly between longs and shorts with an average position size of 1% to 2%.

 

"We seek to provide absolute returns and minimize risk by maintaining an appropriate balance of long and short equity positions with the highest concern for risk management and capital preservation," said Mr. Romero in a statement.

 

Mr. Romero will manage the Aptus fund from his offices in Birmingham, Ala. Before joining Aptus, Mr. Romero spent 10 years actively trading and investing his own account and was the principal and portfolio manager of Tango Capital Management, a McLean, Va.-based long/short equity money management firm.

 

Both of the new Magnum funds are domiciled in the British Virgin Islands. Chaparral's prime broker is RBC Capital Markets, while Lehman Brothers is the prime broker for Aptus. Administrator to both funds is SS&C, while BDO serves as the auditor for the pair.

 

SBarreto@HedgeWorld.com


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