Brummer-Backed Kersley to Explore Ignored European Bank Sector
Brummer-Backed Kersley to Explore Ignored European Bank Sector
(Bloomberg) -- One of Swedish hedge fund manager Brummer’s latest additions to its family of funds is setting out to reap gains from a sector that many investors in Europe have been ignoring.
Newly founded Kersley Street Capital LLP is seeing opportunities in the European financial sector, which had fallen out of favor in the wider investment community in the wake of the financial crisis.
“Competition among investors has decreased due to the sector’s week performance over the past decade or so, and this is particularly true for European banks,” said Martin Deurell, chief investment officer of the London-based asset manager which is co-owned by Brummer & Partners.
Deurell and his team also believe that European financials have moved beyond the peak of regulatory interference, putting the focus back on areas like company and industry performance as well as macro drivers. A typical macro driver could be the steepening yield curve and how that affects individual financial companies, while digitalization and the move to online-platforms are among current industry drivers.
Company specific drivers can be turnaround-cases that with a newly instated management team or a new activist owner. A key metric will be a company’s ability to distribute excess capital, Deurell said.
The long-short equity fund’s positions will typically be held for 6-18 months, as that’s a period within which “it’s reasonable to identify a catalyst,” Deurell said.
Brummer Multi-Strategy plans to invest about $250 million in Kersley Financials Fund at launch on September 1. Brummer is also partnering with Pantechnicon, another U.K.-based investment team which will be a market neutral long-short equity fund within the global industrials space.
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