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Sector Zen takes a hit in February

Report: Systematic Strategies

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Vienna (HedgeNordic) – Sector Zen, the Norwegian managed, Japan focused long/short equity fund, fell 8.5% in February on the back of negative contributions of -10.0% of its long book due to significant negative contributions of Japanese real estate and housing related stocks, and a meager +1.5% contribution of its short book. The TOPIX Core 30, representing some of the largest Japanese companies, led declines on the month with a 10.3% drop, while the small cap index TOPIX small also fell hard and ended the month 8.7% lower. This fall in Japanese equities was attributed to global growth and credit worries on one hand, and the introduction of negative interest rates by the BOJ on the other.

In a letter to shareholders, Zen’s PM Trond Hermansen writes that the long book negative performance was driven by condominium developer Goldcrest with -0.7% after a 21% share price fall, and other negative contributions from Cosmos Initia and Sumitomo Real Estate Sales at -0.4% respectively, Misawa Homes at -0.3% and Keihanshin Building and Panahome at -0.2% each. The Fund’s long positions in financial shares also took a beating, with Ashikaga Holdings, Pocket Card and Kansai Urban Banking contributing a combined -1.3%. The one position within the long book that stood out in a positive way was Dynam Japan, which contributed +0.7% on the back of a share price rise of 61%. The short book was up by 1.5% in February, driven by Nitori (+0.5%), Yamato Holdings (+0.3%), and House Foods (+0.2%).

February 2016 has been Sector Zen’s second worst month since inception in April 2006. By month-end, the fund had 67 positions, of which 56 longs and 9 shorts, with a net long exposure of 84%.

 

Picture: (c) aboutpixel.de—Karin-Reich

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Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.

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