Stockholm (HedgeNordic) – Three and half years after launching a hedge fund employing technical analysis-focused trading, Norwegian fund manager Karl Oscar Strøm has ceased the fund’s operations and is now looking to sell the fund management company along with its alternative investment fund (AIF) structure. This move comes after struggling to generate returns since the fund’s launch in early 2021, which saw a cumulative loss of about 30 percent through the end of February this year.
“The board of Paleo Fund has decided to cease the fund’s activities, and throughout September, we have been in contact with parties involved in setting up similar structures, with the intent of selling the management company and the fund,” Strøm announces in an e-mail. Speaking to Norwegian media outlet Dagens Næringsliv (DN), Strøm explained that his fund management business was no longer profitable, calling his experience “a classic entrepreneurial story.” He acknowledged that launching the fund was always going to be challenging and, “like many entrepreneurs, I have done this wholeheartedly without a plan B.” Reflecting on the journey, Strøm said, “Cinderella fights the dragon for the gold, but like the fairy tale, the dragon turned out to be quite strong.”
“The board of Paleo Fund has decided to cease the fund’s activities, and throughout September, we have been in contact with parties involved in setting up similar structures, with the intent of selling the management company and the fund.”
Karl Oscar Strøm, who set out to explain his investing approach in a book titled “Paleo Trading: How to trade like a Hunter-Gatherer,” employed a flexible, opportunistic approach to enter into various types of relatively short-term trades. Strom described himself as a short-term, technical trader who uses technical and quantitative models with some fundamental analysis aiding the decision process. “All positions are based on technical and quantitative analysis, with fundamental analysis serving as an additional input to the decision-making process,” previously explained Strøm, who has a broad background in finance as a broker, trader, and business developer.
Launched in the spring of 2021 with approximately NOK 75 million in assets under management, Paleo Fund had an underwhelming start, closing its first year down 4.3 percent. Performance continued to deteriorate with a 7.7 percent loss in 2022, followed by a more significant 16.3 percent drop in 2023. The fund incurred a further 5.9 percent loss in the first two months of 2024, translating into a cumulative loss of about 30 percent since its inception.
After deciding to stop the fund’s activity, Strøm is seeking to sell the entire structure consisting of the management company Paleo Capital AS and the fund Paleo Fund AIF. “Establishing a professional management structure will quickly cost up to NOK 1 million in legal and administrative costs, and rarely take less than three months,” according to Strøm. “For the right actor who is interested in starting management, there can be advantages in buying an operational system like this rather than starting from scratch.”
