- Advertisement -
- Advertisement -

Elementa’s X-Factor Stocks Avoid Turmoil

- Advertisement -

Stockholm (HedgeNordic) – Last week, stock markets across the globe endured their worst week since the financial crisis amid growing concerns over a global recession and the coronavirus pandemic. Most Nordic hedge funds experienced losses in the recent market decline, but a few funds such as Stockholm-based Elementa came out from the turbulence unscathed.

The niche long/short equity fund founded and managed by Marcus Wahlberg (pictured) gained a little over six percent last month, marginally surpassing its best monthly performance that was registered last year. “The explanation for the strong performance last month is the reporting period,” writes Wahlberg in a letter to investors. “Several positions on both the long and short side performed well, which resulted in positive alpha,” the letter adds. “The stock selection was driving our performance.”

Elementa undertakes deep fundamental analysis to find “X factor” companies with scalable business models that do not require huge reinvestments to grow operations. In addition to exhibiting a clear route to value creation, Elementa’s investment candidates are led by competent and motivated management teams and trade at attractive valuations relative to future potential. As Wahlberg previously explained HedgeNordic, Elementa employs a research-intensive approach that involves searching for companies with strong growth prospects, business model scalability and strong cash flow generation.

“We have long pointed to the importance of avoiding tail risk and building a robust portfolio that, not only resists, but also benefits when risks materialize,” explains Wahlberg in the letter. “The usual analysis work conducted as part of the stock selection process” builds the foundation for Elementa’s robust portfolio and risk management. Elementa enjoyed five consecutive years of positive performance since launching in March 2015 and delivered an annualized return of 10.4 percent since inception.

Instead of initiating only single short positions on individual companies, Elementa also bought low-priced put options during the autumn amid low option premiums relative to potential volatility. “After a long period of strong equity markets, the premiums for purchasing options in terms of volatility were priced relatively low,” writes Wahlberg. These options represented attractive risk-reward opportunities, creating a “good relationship between risk and potential upside.” In addition to the strong performance from its pure stock positions, “we also received a good contribution from these derivatives during the month.”

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

First Non-Swedish Family Office Investment for Protean Small Cap

Stockholm (HedgeNordic) – About one year after the successful launch of their long/short equity fund Protean Select, Pontus Dackmo and Carl Gustafsson introduced a...

Atlant Högräntefond Leads Peers on Third Anniversary

Stockholm (HedgeNordic) – Around mid-March 2021, Swedish hedge fund boutique Atlant Fonder launched a UCITS-structured fixed-income fund investing in Nordic corporate bonds, drawing from...

Rhenman Welcomes Brummer & Partners Sales Veteran

Stockholm (HedgeNordic) – After close to 18 years as an institutional sales professional at Brummer & Partners, Tom Josephson is set to join healthcare-focused...

Untapped Potential in Symmetry’s Small-Cap Portfolio

Stockholm (HedgeNordic) – Small-cap-focused hedge fund Symmetry Invest has achieved an annualized return of around 20 percent over the past five years and over...

Navigating Asia-Pacific’s Transition to Sustainable Growth

Stockholm (HedgeNordic) – Emerging markets in the Asia-Pacific region, such as China, India, Indonesia, the Philippines, Thailand and Vietnam, have experienced significant economic expansion...

The Performance of US Equities in Election Years Over the Last Century

By Daniel Ung, Kartik Chawla, and Jędrzej Miklaszewski – SPDR: The 2024 US presidential election is on the horizon, and investors are keen to...

Allocator Interviews

Latest Articles

In-Depth: Emerging Markets

Voices

Request for Proposal

- Advertisement -