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strategy profile
entrust capital global long/short equity strategy
senior investment team
Mark Fife has been a managing partner of EnTrust Capital since April 1997.
Prior to forming EnTrust, Fife spent 14 years at Goldman Sachs where he
managed money for high net worth clients. He is also the portfolio manager
of the global long/short equity investment team.
Two analysts work with him on the fund. Brian Delaney, a managing
director of EnTrust Capital, has been with the company since August 2001.
Prior to joining EnTrust he was a manager at PricewaterhouseCoopers, which
he joined in 1994.
Adam Comora is a partner of EnTrust Capital and has been with the
company since July 1998. Prior to joining EnTrust, Adam was an associate
at Chase Securities, which he joined in 1994, specialising in distressed
securities.
“We want to invest in companies
that have strong balance sheets so
when the economic or market environment
is difficult the company
can initiate their own value-creating
catalysts by repurchasing stock
or making accretive acquisitions,”
he said.
The focus is also in finding companies
with high and/or increasing
returns on invested capital. Companies
that can generate attractive
returns without having to constantly
reinvest large amounts of capital in
the business are inherently more valuable
than companies that are large
users of capital, believes EnTrust.
“We want to invest
in companies that
have strong balance
sheets so when the
economic or market
environment
is difficult the
company can
initiate their own
value-creating
catalysts by
repurchasing stock
or making accretive
acquisitions.”
mark fife,
entrust capital
Investment process
EnTrust has a repeatable investment
process. It goes through the
same checklist or process on each
and every potential investment idea.
First step is to start with the financial
documents attempting to ascertain
the quality and sustainability
of cash flow and earnings.
The next step is to spend time
meeting and speaking with the management
teams of the companies
targeted to determine whether or
not these are people EnTrust wants
to be in business with. Some of the
questions the analysts ask are: how
do they think about capital allocation,
how much of a stake do they
own in the company, what is the
company’s history of results under
their leadership?
EnTrust speaks with industry
consultants and participants,
former senior employees and competitors
of the company. This provides
a greater insight into industry
dynamics and the particular corporate
culture of the entity.
EnTrust follows a disciplined
investment strategy and attempts
not to “play away games”. By this
EnTrust means it only wants to
invest where it believes it has the
greatest edge – just like sports
teams have at home.
Investors often make mistakes
by going outside of their circle of
competence, believes EnTrust. The
investment team does not look to
invest in every industry or country.
“We want to stay in our own
sandbox and only play where the
odds of winning are greatest,” says
Fife.
The sectors EnTrust focuses its
efforts on are retailers, industrial
manufacturers, business services,
media and entertainment, gaming
and lodging, restaurants, and
energy.
Low volatility goal
Risk management is critical to the
way the portfolio is managed. The
goal is to continue managing a
relatively low volatility portfolio.
Entrust continuously reviews the
sector, geographic and capitalisation
breakdown.
In addition, all position sizes are
listed. “We do not allow any sector
to be more than 15% net long or
net short. No individual stock short
position can be larger than 3% of
the portfolio at market value. Our
largest long position can be up to
6% of the portfolio,” explains Fife.
EnTrust invests in publicly traded
equities. On rare occasions it may
hedge the portfolio by using options
but this is always a very minor part
of the portfolio.
In some circumstances trades
will include event driven, special
situations and pair trades, to
name a few.
The great majority of positions
both long and short are longer-term
investments. “Our average holding
on the long positions is one to three
years and shorts average six to 24
months. Occasionally, we invest in
stub and pair trades,” says Fife.
Liquidity is important, particularly
when some positions are held
for longer periods. EnTrust handles
this aspect by keeping the portfolio
highly liquid.
“We invest in very few turnaround
situations. Our portfolio is very
liquid. As a matter of fact, if we were
just 20% of the trading volume in a
stock we would expect that we could
liquidate 54% of our portfolio in a
day, 76% in a week and 93% of the
portfolio in 10 days,” confirms Fife.
The three senior investment team
members of the team have all been
fundamentals of entrust capital global
long/short equity strategy
Name of manager:
Address of manager:
Contact:
General company overview:
together since 2001. Four additional
analysts have been added in the last
several years. There has been little
turnover throughout the company’s
history.
EnTrust believes it can manage
significantly more money in the
strategy. “We have been looking at
many more internationally headquartered
companies in the past several
years and we plan to continue to
expand our research team if assets
under management increase,” concludes
Fife. n
EnTrust Partners
717 Fifth Avenue, 25th Floor New York,
NY 10022
Marc Zwebner, managing director of
business development
Approximately $4.8 billion assets
(including multi-strategy fund of hedge
funds platform), 49 employees, offices in
the US (New York City, Washington DC,
Chicago) and the UK (London)
Global long/short equity strategy: Approximately $670 million AUM in
strategy as of October 1, 2008
Target annualised return: 10%–15%
Target annualised volatility: 4%–7%
Geographic focus:
“Our portfolio is
very liquid. As a
matter of fact, if we
were just 20% of
the trading volume
in a stock we would
expect that we
could liquidate 54%
of our portfolio
in a day, 76% in a
week and 93% of
the portfolio in 10
days.”
mark fife,
entrust capital
US, Canada and Europe
www.hedgefundsreview.com November 2008 | Access to Islamic Hedge Funds Supplement | 27