Stockholm (HedgeNordic) – Danish boutique asset manager St. Petri Capital is readying the launch of its long-only European small-cap fund in the second half of 2022. Scheduled to launch in September or October, the fund will be managed by Ivan Larsen, a long-time small-cap-focused portfolio manager at Danske Bank Asset Management who joined St. Petri Capital as partner this year, and investment analyst Johann Grøndahl.
“On April 1st this year I announced my return to the equity market as a partner in St. Petri Capital, where I will be starting a long-only European small-cap fund,” Ivan Larsen writes on LinkedIn. “I am very excited to come back to the equity market – I have spent the last three months getting close to the European small-cap market again – a market I have been following for more than 20 years until I resigned from my former employer back in March 2021,” he continues. “I have spent a lot of time together with my colleague Johann Grøndahl to create our new fund – we still hope to be able to launch our new fund around September/October this year.”
“I have spent a lot of time together with my colleague Johann Grøndahl to create our new fund – we still hope to be able to launch our new fund around September/October this year.”
The upcoming fund launch will complement St. Petri Capital’s core offering consisting of a thematic-focused long/short equity fund. St. Petri L/S, managed by St. Petri Capital co-founders Michal Danielewicz and Jens Larsson, has delivered an annualized return of about 17 percent since launching in early 2018 after booking an annual gain of 98 percent in 2020. The long/short equity fund is up 3.8 percent in the first five months of 2022 after edging up 1.3 percent in May, its fourth positive month in five this year.
Ivan Larsen and his co-manager Johann Grøndahl will employ a long-term stock-picking strategy focused on so-called quality companies to run the soon-to-be-launched long-only fund. “I have developed my investment philosophy over many years,” says Larsen. “I have always been a long-term stock picker focusing on quality companies with a strong market position, companies that have some kind of uniqueness,” he explains his investment approach. “In our new fund, we define these as quality companies with an edge.”
“I have always been a long-term stock picker focusing on quality companies with a strong market position, companies that have some kind of uniqueness.”
Despite a challenging environment for equity investors this year, with the MSCI Europe Small Cap index, for instance, down over 21 percent through the end of June, Larsen sees good prospects for many quality companies in the small-cap space. “This [decline in stock prices]reflects partly a different world with a much more difficult outlook for many companies,” says Larsen. “We are facing a war on European soil – a completely new situation. We are also facing high inflation – something we have not seen for many years,” he continues. “Lastly, to combat the ravaging inflation, we are also facing much higher interest rates than we have had for many years.”
“Just because a company for some odd reason suddenly is out of fashion does not mean that it isn’t still a great company that can and most likely will deliver good returns to its investors.”
“However, I also believe that it, in many cases, reflects a clear over-reaction by the market,” the portfolio manager comments on the recent decline in stock prices. “We have some great quality companies with strong market positions being down 30-50 percent,” he points out. “In our new fund, we plan to invest in some of these companies. Just because a company for some odd reason suddenly is out of fashion does not mean that it isn’t still a great company that can and most likely will deliver good returns to its investors.”