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Friday, January 7, 2011

ERI’s parent Lionhart Europe’s best performing hedge fund and world’s second best

Environmental Resources Investments’ (ERI) main shareholder Lionhart’s Aurora Fund has been identified as Europe’s best performing hedge fund and world’s second best in an article published in the UK’s Guardian.

The article said that Lionhart Aurora Fund, managed by Cayman-based Lionhart Advisors Group, has chalked up a 79% gain in 2010, more than any other European hedge fund. Globally it is the second best performer after US-based Willowbrook Fund (up 97% in 2010) according to data from BarclayHedge.Lionhart Investments Ltd. owns 85% stake in ERi.Following are excerpts from the article published in Guardian titled “World No.2 hedge fund emerges in Wimbledon Common”

Far from the hustle of Wall Street and the expensive addresses of Mayfair in London, Lionhart Aurora, based in Wimbledon, has emerged as a world-beating investment fund Photograph: Mark Lennihan/AP
Far from the skyscrapers of Wall Street and in sharp contrast to its swish Mayfair rivals, a five-person office in the middle of Wimbledon Common has emerged as one of the world’s best performing hedge funds this year.

The Lionhart Aurora Fund, managed by Cayman-based Lionhart Advisors Group, has chalked up a 79% gain since the beginning of January, more than any other European hedge fund. Globally it is the second best performer after US-based Willowbrook Fund (up 97% this year), according to data from BarclayHedge.

Part of a group that employs 25 people in London, Toronto, Singapore and New York, the $65m (£40m) Aurora Fund is mostly invested in everything that western world asset managers have been chasing this year: mining and mineral resource companies as well as early-stage businesses including porcelain and leather companies.

“We invest in assets in their early stages, and when they mature, we float them on the stock market, mostly in Toronto,” said Tom Scanlan, head of marketing at Lionhart.

Some of the fund’s top listed investments have been in Sri Lanka, a country in the midst of civil war until last year, but now offering some of the highest stock market returns in the world. “We only made very small investments when we arrived, we waited until the end of the civil war, and then we were well placed to decide what to buy,” Scanlan said.

Mining investments, such as copper assets in Zambia, are typically sold off once production starts, passing on the development risk to another party. Scanlan said: “We are using the financial markets to monetise the improvement of the viability of an asset coming to production.”

Lionhart floats its start-up businesses in Toronto rather than on London’s Alternative Investment Market as it has more liquidity, Scanlan said. Toronto is also the base of the company’s founder, Terrence Duffy, who moved to Canada almost a decade ago. A trader with 20 years’ experience, Duffy founded Lionhart in an office near his family home in Wimbledon in 1993, with less than $10m under management. The company now manages $800m.

The hedge fund industry has about $1.7tn of assets under management worldwide, after adding a net $19bn of new capital in the third quarter, according to Hedge Fund Research.

Stocks and bonds in developed markets in Europe and the US have produced single digit gains at best this year, as they have been hit by languishing economies and the European sovereign debt crisis. “Institutional investors are aware that western equities are no longer the only option, that they have to diversify and one of the easiest ways is to go to hedge funds with exposure to emerging markets,” said Gwyn Roberts, editor of HFMWeek, the trade publication.

Hedge funds, usually more flexible and able to make faster decisions than large pension funds or insurance companies, started moving east almost three years ago. Asian economies were continuing to develop as Europe and the US were about to sink in the worst recession since the 1930s.

Hedge funds have produced an average return of just 7.1% this year – a disappointment to investors who pay fees of up to 20% of any profits made. Some fund managers say their poor returns are linked to the support European governments are offering banks, which are therefore not forced to sell non-performing assets, eliminating investment opportunities for distressed asset investors. (Source: http://www.guardian.co.uk/business/2010/nov/12/world-no2-hedge-fund-in-wimbledon-common)

source - www.ft.lk