Samena Capital Starts Japan-Focused Stock Hedge Fund

Date: Tuesday, May 12, 2009
Author: Tomoko Yamazaki, Bloomberg

Samena Capital, a London-based investment firm with more than $200 million, will start a Japan- focused hedge fund, betting the nation’s stock prices will continue to rebound in the wake of the global credit crisis.

Samena Japan Absolute Return Fund will be managed by Ramiz Hasan and Celia Farnon and will start with capital of $25 million, the company said in an e-mailed statement. It will employ a so-called long-short strategy and be marketed primarily to institutional and high-net-worth investors in Asia, the Middle East, North Africa, the U.S. and Europe.

The firm’s entry to the Japanese market comes after an exodus of funds targeting the nation’s shares last year. It’s betting the Nikkei 225 Stock Average’s 32 percent rebound since a 27-year-low in March has further to go.

“Is there value still left in Japan? Yes,” Hasan, who ran a Japan-focused hedge fund at his own firm Invicta Investment Management until 2007, said in Hong Kong.

The new fund is the second after Samena Capital, established in February 2008, raised about $200 million for the Samena Special Situations Fund, which invests in companies going through transformations such as mergers, acquisitions and management changes. The fund has returned 22 percent from Aug. 15 through yesterday after keeping its investments in cash until the middle of March, according to Hasan.

Investor Appetite

The firm also plans to open a new investment advisory office in Tokyo in the next two months, Hasan said in a telephone interview.

The global hedge-fund industry decreased by $136 billion in the first three months of this year to $1.34 trillion, following record losses last year, according to Singapore-based Eurekahedge Pte. The industry has shrunk 32 percent from a peak of $1.95 trillion at the end of June 2008.

Thirty-two Japan-focused, long-short equity funds that bet on the rise and fall of the country’s stocks shut down last year. Hedge funds focused primarily on Japan saw the greatest number of closures in the Asia-Pacific region last year, according to London-based AsiaHedge magazine. Another five such funds closed in the first quarter.

In addition, 12 Japan market-neutral funds went under in 2008. Market-neutral funds seek to profit without taking a bet on the direction of the market.

“This is the best time to be investing in,” Hasan said. “If you look at the fund structure, you can hedge and you can short. We will be careful in terms of initial entry point.”

More Funds

The firm aims to capitalize on pension and health-care reforms that may follow the nation’s forthcoming election, as well as greater government appetite for engagement with countries in the Asian subcontinent, the Middle East and North Africa, it said.

Spencer Privett, joint managing partner at Maples and Calder in Hong Kong, said the law firm has worked in the last six months on at least a dozen new Cayman Island-based funds that focus on Japan.

“After a relatively quiet period we are now starting to see movement amongst international and domestic fund managers setting up new Cayman funds investing, or for sale to investors, in Japan,” he said.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices, and participate substantially in profits from money invested.

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net