Stockholm (HedgeNordic) – Stockholm-headquartered Case Fonder opted to diversify and expand its asset management operations with the acquisition of Celina’s fund operations (formerly known as Catella). The integration of Celina’s funds and hedge funds under the umbrella of Case Fonder is in full effect, with each fund making its place in the Case product range. Case Hedgefond, once a €1.4 billion Catella-branded low-risk multi-strategy hedge fund, is also undergoing an adaptation and restructuring process.
“Celina Hedgefond officially moved under the Case umbrella just a few weeks ago,” says Fredric Calles, the former CEO of Celina (formerly Catella) who serves as Head of hedge funds and alternatives at Case Fonder. Calles became the responsible portfolio manager of Case Hedgefond in mid-November 2022. “Here at Case, we have a strong team in all positions; experienced managers in credit, equities, and alternatives, as well as excellent people in operations and sales. All equally important for the success of the fund,” Calles tells HedgeNordic.
“Here at Case, we have a strong team in all positions; experienced managers in credit, equities, and alternatives, as well as excellent people in operations and sales. All equally important for the success of the fund.”
The hedge fund has long combined long/short equity and fixed-income investing in the pursuit of achieving low-risk and attractive risk-adjusted returns. While the fixed-income strategy has remained broadly unchanged over time, the long/short equity bucket has experienced multiple reiterations over the years and is undergoing another one yet again.
An Overhaul of the Equity Bucket
“We took away most of the risk in the long/short equity bucket when I took over, and we are slowly rebuilding the portfolio,” says Calles. To maintain equity exposure in the rebuilding process, Calles and the team added positions in investment holdings versus individual companies and added some replicas of the equity strategies run by Case Fonder. “Case All Star was rewarded as the best equity fund in 2022 by Privata Affärer, of course we can find a lot of inspiration from the equities team,” Calles points out.
“We are building this leg brick by brick, and we plan to use different strategies, ranging from pair trading, outright positions with a hedge or without, to event-driven positions,” explains Calles. Within its mandate, Case Hedgefond is gradually employing a “truly mixed equity strategy,” according to Calles. “We can do different kinds of strategies within equities. As part of the long/short equity strategy, we are now implementing a system of systematic alpha capture in pair trading that the team has had great success from in previous settings,” he elaborates.
Fredric Calles, who has a strong background in derivatives from previous roles at Alfred Berg as Head of Trading, UBS and Handelsbanken, will slowly increase the use of derivatives in the management of Case Hedgefond. “With my background in derivatives, I think everyone following us expects us to make use of that,” considers Calles. “It is obvious that there are quite simple ways to lower risk and enhance return just by using standardized derivatives.”
The team led by Calles has completed the evaluation of the fund’s former strategy and is currently focused on implementing new sub-strategies. “The fund aims at being a true multi-strategy fund with several new buckets of strategies being added gradually and carefully over time,” says Calles. Case Hedgefond is designed to be both an attractive portfolio diversifier in a broader portfolio and a standalone investment for investors, according to Calles. “Our aim is to deliver a good risk-adjusted return above what you get in the low-risk segment of credit, but not necessarily as high as in outright equity investments,” he explains.
“The fund aims at being a true multi-strategy fund with several new buckets of strategies being added gradually and carefully over time.”
Despite still undergoing an adaptation and overhaul process, 2023 is expected to be a promising year for Case Hedgefond after the fund achieved an advance of 5.1 percent in 2022. “We have great confidence in our credit portfolio,” says Calles. “2022 was a bad year for credit, so this year we are aiming at recovering most part of that money in the credit portfolio. We have started to add on equity strategies, which together with the credit portfolio, make us looking at this year being a good one.”
“We are starting from where the previous team left and we are developing some of the things that worked and have started adding new strategies to our fund,” says Calles. “We are very careful and systematic in our approach and put great value in risk management. If we do not succeed, it will not be because we were sloppy or overconfident,” Calles continues. To increasingly turn Case Hedgefond into a true multi-strategy vehicle, Calles and his team are on the lookout for new portfolio managers running appealing strategies. “We welcome potential managers with interesting strategies to reach out to us. We will always be looking for new talent to help us develop our product,” concludes Calles.