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One Nordic Cross Hedge Fund is Liquidating

Report: Systematic Strategies

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Stockholm (HedgeNordic) – Nordic Cross Small Cap Edge, a small-cap-focused long/short equity fund managed by Oscar Östlin alongside Ulf Strömsten, will be liquidated due to assets under management falling below an optimal level for fund management. The fund delivered an annualized return of about 11 percent over the first four full years of its operation, but is down 23 percent year-to-date through June 21 after incurring a monthly loss of 13.5 percent in May.

“On 22 June 2022, CSSF, the Swedish Financial Supervisory Authority, the fund company FundRock and the board of SICAV SEB Prime Solutions approved the request to liquidate the Nordic Cross Small Cap Edge fund,” writes a notice to investors. “The fund is liquidated, in accordance with the prospectus, due to the fact that its size is less than EUR 15 million and that the managers are not deemed able to manage the fund in the manner that is in the best interests of the fund unit holders,” the notice continues. “With this approval, the fund will be closed for trading. The managers will now begin a process to sell the holdings in a way that is judged to create as much value as possible for the fund’s investors.”

The decision to liquidate Nordic Cross Small Cap Edge comes after the announcement of Carnegie Fonder’s plans to acquire the Nordic Cross funds in a move by Altor-owned asset management group Carneo to merge its Swedish fund management operations under one umbrella (read more). In a separate deal, Nordic investment bank Carnegie – also owned by private equity firm Altor – is in the process of acquiring  Carneo’s Carnegie Fonder, Holberg Fondsforvaltning and CAAM Fund Services. As previously explained by Anna Tropp, Head of Communications at Carneo, “Carnegie Fonder will acquire the Nordic Cross funds but the personnel will not automatically be transferred. There are currently processes running in order to decide on the staffing once the funds have landed in their new home.” The remaining Nordic Cross funds will get Carnegie names once transferred.

Nordic Cross Small Cap Edge was launched in late 2017 and had been co-managed by Mikael Hanell and Ulf Strömsten until Hanell left the asset manager for new challenges in the second half of 2021. Hanell’s role as portfolio manager responsible for Nordic Cross Small Cap Edge was assumed by Oscar Östlin, who has co-managed the small-cap-focused long/short equity fund until now alongside Ulf Strömsten. Founding partner and portfolio manager Emil Nordström has been assisting the duo with derivative strategies.

Nordic Cross Small Cap Edge used to maintain a long portfolio of about 25 holdings and used short positions and derivatives to reduce market exposure. After four consecutive years of positive performance, the fund lost about 23 percent year-to-date through June 21. The fund’s May decline of 13.5 percent was mainly attributable to poor performance from two holdings: RhoVac and Awardit. Swedish pharmaceutical company RhoVac, which researches vaccines preventing recurrence of metastatic disease in prostate cancer, saw its share price plummet 94 percent in late May after announcing that the company’s ongoing study did not meet its primary goals.

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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

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