15 Dec 2011
Varus Capital Management: 2011 investment review
Q1 2011: Resilience – Varus Fund up 13.6%
2011 started with markets being stress-tested by an exceptional high amount of incidents and a remarkable resilience against these. Volatility set a four year low in February, but March demonstrated how fast equity markets can change with the ECB’s hint of raising interest rates, the terrible earthquake and tsunami in Japan and fears on rising input costs hurting corporate earnings. Main performance contributors in Q1 have been investments among the themes we announced in our December 2010 monthly statement: Sky Deutschland, M&A cases (SGL Carbon, Synthes, and Tognum), Construction (HeidelbergCement) and Solar (Centrotherm Photovoltaics). In Q1 2011, our average gross exposure has been 124% with an average net exposure of 50%.
Q2 2011: Risk Management - Varus Fund up 2.0%
Q1 German GDP surprised positively, while peripheral European countries’ growth remained under pressure. Economic indicators for Q2 suggested that this picture would not change. European stocks fell by for eight straight weeks in Q2 due to Greece debt default concerns. The Federal Reserve cut its growth forecast for the world’s largest economy. Bad? No, very good for us to demonstrate our risk management skills in constant falling markets like in 2008 and many very weak months since the launch of the Varus Fund. In Q2 2011, our average gross exposure has been 155% with an average net exposure of 43%.
Q3 2011: “This is the time when reputations are made” – Varus Fund up 2.2%
During Q3, the stock market was heavily affected by the sovereign debt situation fears of slowing economic growth in Europe. Markets suffered the biggest losses since Lehman’s bankruptcy with a 28% decline for the Eurostoxx 50 within one month and the DAX Index even lost 34% by mid-September from its year high in July (even worse vs. the 1987 Crash). During August, the Varus Fund went into 100% cash and returned plus 0.95% net vs. DAX Index -19.2%. The Varus Fund was up 2.2% in Q3 2011 vs. DAX down 25.4% with an average gross exposure of 54% and net exposure of -2%. Preserving capital in falling/volatile markets and reaction to market changes is very important in managing the Varus Fund. This has been achieved by reducing our gross and net exposures, active profit taking and strict stop loss execution in volatile markets.
Q4 2011: Asset Growth – Varus Fund up 2.5%
"You need patience for something to grow. The trees you plant you may never see in their full glory, while the ones you enjoy now were put there by people who may never have seen the results of their work". The Varus Fund has attracted substantial capital inflows as of 1 November 2011 from friends and family, institutional investors and family offices, which marked the beginning of the second growth phase of the Varus Fund and HSCA. In Q4 2011, our average gross exposure has been 21% with an average net exposure of -2%.
Q1 2011: Resilience – Varus Fund up 13.6%
2011 started with markets being stress-tested by an exceptional high amount of incidents and a remarkable resilience against these. Volatility set a four year low in February, but March demonstrated how fast equity markets can change with the ECB’s hint of raising interest rates, the terrible earthquake and tsunami in Japan and fears on rising input costs hurting corporate earnings. Main performance contributors in Q1 have been investments among the themes we announced in our December 2010 monthly statement: Sky Deutschland, M&A cases (SGL Carbon, Synthes, and Tognum), Construction (HeidelbergCement) and Solar (Centrotherm Photovoltaics). In Q1 2011, our average gross exposure has been 124% with an average net exposure of 50%.
Q2 2011: Risk Management - Varus Fund up 2.0%
Q1 German GDP surprised positively, while peripheral European countries’ growth remained under pressure. Economic indicators for Q2 suggested that this picture would not change. European stocks fell by for eight straight weeks in Q2 due to Greece debt default concerns. The Federal Reserve cut its growth forecast for the world’s largest economy. Bad? No, very good for us to demonstrate our risk management skills in constant falling markets like in 2008 and many very weak months since the launch of the Varus Fund. In Q2 2011, our average gross exposure has been 155% with an average net exposure of 43%.
Q3 2011: “This is the time when reputations are made” – Varus Fund up 2.2%
During Q3, the stock market was heavily affected by the sovereign debt situation fears of slowing economic growth in Europe. Markets suffered the biggest losses since Lehman’s bankruptcy with a 28% decline for the Eurostoxx 50 within one month and the DAX Index even lost 34% by mid-September from its year high in July (even worse vs. the 1987 Crash). During August, the Varus Fund went into 100% cash and returned plus 0.95% net vs. DAX Index -19.2%. The Varus Fund was up 2.2% in Q3 2011 vs. DAX down 25.4% with an average gross exposure of 54% and net exposure of -2%. Preserving capital in falling/volatile markets and reaction to market changes is very important in managing the Varus Fund. This has been achieved by reducing our gross and net exposures, active profit taking and strict stop loss execution in volatile markets.
Q4 2011: Asset Growth – Varus Fund up 2.5%
"You need patience for something to grow. The trees you plant you may never see in their full glory, while the ones you enjoy now were put there by people who may never have seen the results of their work". The Varus Fund has attracted substantial capital inflows as of 1 November 2011 from friends and family, institutional investors and family offices, which marked the beginning of the second growth phase of the Varus Fund and HSCA. In Q4 2011, our average gross exposure has been 21% with an average net exposure of -2%.
