Opalesque Industry Update - Cube Capital, the $1.3 billion global alternatives investment firm has opened its $100M Cube Global Opportunities (CGO) fund to outside investors for the first time since its launch in May 2009. |
Cube Global Opportunities is an event driven fund with a mandate to invest long and short in equity, debt and derivative securities globally. The fund pursues an uncommon approach to event driven investing and takes advantage of the opportunities it perceives across select countries and sectors predominantly in Asia and Europe while investing opportunistically across the capital structure.
CGO’s event driven themes center around dislocated markets and disruptions within sectors and industries, in which changes in the perception of the key risks for the sector leads the traditional investor base to seek to exit the sector almost regardless of price. This can create very attractive entry points for new investors. In addition, on the short side, opportunities sometimes present themselves in sectors facing disruptive changes where investors have not factored in enough downside as a result of those changes.
Whereas there are many event driven funds that focus on announced corporate events such as takeovers and spinouts with defined exit points, Cube believes that there are very few that focus explicitly on disruptive events that create great entry points into trades.
Of course, finding dislocated sectors is only part of the challenge. Nick Linnane, Senior Portfolio Manager for the Fund elaborates “Having identified sectors that appear interesting, the portfolio management team has to do extensive fundamental work on the sector and the relevant companies and securities, as well as the potential catalysts that may cause a subsequent re-rating or the securities; carry also comes into play in the case of credit.” Sectors where the team has prior experience and/or those that are likely to provide opportunities for several years therewith justifying the research time tend to be preferred.
“We think this is a great time to open this fund to outside investors,” said Francois Buclez, Chief Executive Officer of Cube Capital. “We expect global economic instability to continue for the foreseeable future, and continue to be a fertile source of dislocation, so there will be many opportunities for this contrarian fund and its investors.”
The fund has not had a down year since inception and targets returns of 15%. The fund is event-driven and opportunistic, with forward-looking risk management aimed at protecting investors from excessive drawdowns.