Alternative investment consultant Aoifinn Devitt was daring last Christmas and made her wish list public.
Now, Ms. Devitt founder and principal of London-based Clontarf Capital in the firms December newsletter is coming clean on how those wishes panned out. Last year we listed no less than eight items on our Christmas wish list. We were too greedy and many of our gifts turned out to be profoundly disappointing some not doing at all what they said on the box, while some seemed to be missing their batteries.
• The wish: A proven but currently unloved value manager who has not had much luck in 2007. The result: This manager was cautiously positioned and held high cash balances throughout 2008 it is still down 17% for the year.
• The wish: A small, reasonably concentrated fund of Asian hedge funds. The result: As of the end of October this fund had lost 24% against the MSCI Asia Pacific index (which fell 45%).
• The wish: A long-biased distressed fund that recently opened to take advantage of value opportunities in credit markets. The result: This strategy is still unproven, but we believe that this gift will come into its own this year.
• The wish: A small (less than $500 million) European long/short manager with proven shorting experience. The result: This manager circumvented the short-selling restrictions and the appalling Volkswagen AG price spike to be nicely positive on the year. It was one of the lucky ones.
• The wish: A slice of a commodities index, to be entered in installments. The result: a very disappointing gift.
• The wish: An emerging Europe real estate fund. The result: See previous result. We believe that this is interesting in the long term, but dont expect to reap many rewards in the foreseeable future.
• The wish: A boutique private equity fund of funds focused on the middle market. The result: We are nervous about the operating environment, but the low leverage in the deals in this sector leads us to expect it to shape up better than its large cap brethren.
• The wish: Some discounted shares of one of the high-profile alternative groups that came to market this year. The result: Alas, they were not discounted enough. This is a gift that we are likely to leave on the shelf in the hope that it will some day come back into fashion.
As for next year, Ms. Devitt wrote that we will be more contrite, and less greedy. We will ask for nothing in equities (although will still hold onto everything we received last year in the hope that they will come right again). This year our list is all about the credit opportunity but we dont necessarily want everything under the tree on Christmas morning.