Paul Sundelson at Visio Capital Management in Johannesburg is off to a flying start with his Occasio Fund, which focuses on distressed situations and undervalued opportunities in the South African market.
A BCom CFA, Sundelson joined Visio, headed by Patrice Moyal, in 2003. He started his career at HSBC in 1998, moving over to Investec after it acquired the division, where he worked as a portfolio manager in the Private Client Securities division and also in corporate broking. At Visio, he conducts research and analysis across all sectors and is responsible for fund management, derivatives strategies and dealing.
Occasio, which means “favourable moment” in Latin, has gained a net 43% since launch in May, against a 21.8% rise in the Johannesburg All-Share Index. It now has just over R15 million under management, and will be capped at a relatively small R100 million due to the fact that it focuses on less liquid stocks.
The fund complements Visio’s existing range of South African hedge funds, which have a strong track record. It is more concentrated than most equity hedge funds in the market, taking higher concentration positions, with around 15-30 counters in the portfolio.
Besides equity positions it can also trade corporate bonds, currently seeing opportunity in South African names listed offshore, which are trading at distressed levels. Its best month was a 10.8% gain in June, with August’s 1.7% return the lowest so far.
The fund, which has been fully invested until recently, currently has a number of individual weightings in the 3-7% range, as well as pair trades, with corporate bond exposure now at around 16%. Offshore exposure is restricted to 30%, with the maximum single position at 15% of the portfolio.
Visio is one of the country’s most established hedge fund managers, with more than R3.5 billion ($420 million) under management and an investment team of seven. Besides the South African long/short strategy, which Moyal launched in 2003, it also has the Mazi Visio market-neutral fund, managed in a joint venture with Malungelo Zilimbola; and two Zimbabwean funds, run in a JV with Ronald Chabvonga.
Occasio offers three-month liquidity due to the nature of the underlying assets, although every effort would be made to return capital to investors within a shorter time frame, if necessary.
Sundelson sees ongoing opportunity for the strategy, with the ability to switch between small and large-cap counters as markets change. – Oct 2009