Alternative Market Briefing

Emerging hedge fund bullish on banking sector beats market

Monday, May 15, 2017

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David Verlander Benedicte Gravrand, Opalesque Geneva for New Managers:

David Verlander has been an investor for more than 20 years with a long history of analysing financial services companies. He saw a unique opportunity set in that sector a few years ago, and this compelled him to launch his own hedge fund.

Fresh out of university, David Verlander started his career as a bank examiner with the Federal Reserve Bank of Atlanta. He went on to be a research analyst covering bank and specialty financial services stocks at Natwest Securities, and then moved to the buy-side and became a portfolio manager at Basswood Capital Management in New York.

"It was a sector fund that specialised in financial services," he tells Opalesque. "I was one of three portfolio managers. We grew the fund up over $1bn and I left in 2007. I took some time off from managing other people's money and just managed my own."

He got drawn back to the hedge fund world in early 2014 because the opportunity in financial services was so compelling. As a long-term, bottom-up fundamental investor focused on value, he saw that banks were trading at their lowest multiples since the early 1990s, mainly because of the historically low interest rates. "When interest rates are that low, it cripples a bank's net interest income, which is a bank's revenue engine (accounting for roughly 70% of rev......................

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