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PriorNilsson Sees Opportunities in Real Estate

Report: Systematic Strategies

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Stockholm (HedgeNordic) – The Swedish housing market, one of the hottest property markets during the pandemic, shows early signals of a global housing cooldown amid central banks’ efforts in tackling soaring inflation. PriorNilsson Fonder has launched a long-biased long/short equity fund, PriorNilsson Fastighet, to capitalize on opportunities in both Swedish and global real estate markets.

“We find that the turbulence in the market creates great opportunities to buy undervalued assets, where we broadly believe that the market has discounted a worse scenario than the underlying businesses actually face,” explains Gustav Sällberg, who is responsible for managing PriorNilsson Fastighet. “We find that the market mayhem creates an attractive entry point for our clients’ long-term returns – as it is a long-biased fund.”

“We find that the market mayhem creates an attractive entry point for our clients’ long-term returns – as it is a long-biased fund.”

In addition to investing in stocks within the property sector, the fund can also invest in related sectors such as the construction sector or housing development. Launched on October 3, PriorNilsson Fastighet is a long-biased long/short equity fund that maintains a net exposure between 90 and 100 percent. The fund uses a 150/50 long-short extension investment strategy that allows its portfolio management team to short up to 50 percent of the portfolio’s net assets.

“By shorting we can use these funds to invest more in our best ideas.”

“The rationale for the short-book is to create relative value, and thus higher risk-adjusted returns. By shorting we can use these funds to invest more in our best ideas,” explains Sällberg, who joined PriorNilsson as a real estate-focused portfolio manager in 2019. “We strive to find underperformers consisting of inferior and/or overvalued real estate,” he elaborates. “This is most often combined with troubled balance sheets and/or weak asset allocation capabilities.”

PriorNilsson also launched a global small-cap-focused long-only equity fund earlier this October. The two new launches expanded PriorNilsson’s suite of funds to nine vehicles, which also includes hedge funds PriorNilsson Idea and Yield.

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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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