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When One Plus One is Greater Than Two

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Stockholm (HedgeNordic) – Adrigo Small & Midcap L/S achieved its best month on record in May in the first month of Gladiator Fond’s merger into Staffan Östlin’s fund. Adrigo Small & Midcap L/S booked a monthly gain of 13.6 percent in May to trim the year-to-date decline to 5.1 percent.

“We think the performance shows that one plus one equals 2.5 when Gladiator was merged into Adrigo,” Staffan Östlin comments on the performance of Adrigo Small & Midcap L/S. Max Mitteregger’s long/short equity fund was merged into Adrigo Small & Midcap L/S on May 2 after 17 years in operation. “We have more muscles and staying power in our dynamic positions and average market cap has increased, which is good from a liquidity point of view,” says Östlin. “Overall, we noticed very good performance from ‘old Adrigo Holdings’ as well as from the holdings we took over from Gladiator.”

“We think the performance shows that one plus one equals 2.5 when Gladiator was merged into Adrigo.Overall, we noticed very good performance from ‘old Adrigo Holdings’ as well as from the holdings we took over from Gladiator.”

Adrigo Small & Midcap L/S, managed by CIO Staffan Östlin and his co-portfolio manager Johan Eriksson, usually maintains a Nordic-focused, concentrated, high-conviction portfolio that houses between 25 to 30 long positions, with roughly a similar number of short positions to reduce net market exposure. “We had good performance from the long side as well as from shorts,” Östlin comments on the May performance. On the long side, the fund’s position in Swedish biotech company BoneSupport had a significant contribution to performance.

“We had good performance from the long side as well as from shorts.”

“We have been invested in the company since the current management came onboard in the spring of 2018 and had a strong belief that the FDA would approve Cerament G,” explains Östlin, referring to BoneSupport’s bone void filler comprising the antibiotic gentamicin that is the first device-drug combination product of its kind. “Although the stock is up by some 50 percent since the news broke, we have to say that we are surprised that it hasn’t performed even better,” says Östlin. “We remain happy long-term holders of this gem.”

Another of Adrigo’s large positions that performed well in May was Swedish science-led biopharmaceutical company Camurus. “Q1 figures were stellar including the first profit since the IPO,” comments Östlin. “We continue to see a major potential for Buvidal and it looks as the market put more or less zero value on its pipeline.” According to Östlin, the Swedish firm’s long-acting opioid dependency drug Buvidal “has strong clinical data and is validated among prison settings, for instance, where the prevalence is high.”

“Our monthly returns will occasionally show larger swings month over month, as noticed in 2022. We often emphasize the importance of having a long-term view when investing along with ourselves.”

“Our monthly returns will occasionally show larger swings month over month, as noticed in 2022,” concludes Östlin. “Investing in small and mid-caps and having a focused and concentrated portfolio will generate occasional swings in performance. We are not satisfied with showing high short-term volatility,” he acknowledges. However, “we manage the portfolio with a long-term focus, looking for companies that can compound high returns over time. We often emphasize the importance of having a long-term view when investing along with ourselves, focusing on our target of delivering 8-16% p.a. with volatility below the Nordic small & mid-cap market.”

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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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