US hedge fund The Gargoyle Group is directing its capital-raising efforts towards Asia, where it believes investors will be in the market for a niche US equities strategy as a means of portfolio diversification.
The firm hopes to bring its $210 million long/short Gargoyle Hedged Value Fund up and beyond its pre-crisis AUM of $500 million in 2007 by launching a fundraising campaign in Asia and Europe. Gargoyle would not specify the amount that it hopes to raise from Asia.
The strategy, which it says has a capacity in excess of $2 billion, has a long portfolio of undervalued stocks that are chosen from the 1,000 mostly highly capitalised companies listed in the US.
Its short book comprises overpriced near-term call options on a blend of equity indices, putting it in a niche category among long/short funds, which typically short-sell overpriced stocks. Launched in 2000, the fund returned 18.16% net of fees in 2010 and 1.43% in February.
Asian institutional investors will be targeted in Hong Kong, Singapore and Japan, according to Lars Bjoergerd, managing director of MCAM Group, which is marketing the fund in Asia and Europe.
It is in line with Hedged Value Fund’s existing US-concentrated investor base, with family offices and high-net-worth individuals comprising about 50% of assets under management, and the remainder split between funds of funds and institutional investors, which includes US endowments.
Gargoyle is raising capital outside of its US home market for the first time, driven by investor demand for US equity strategies and its niche standing in the market as a fund that uses options to hedge equities, says Bjoergerd.
Allocators in Asia have previously expressed interest in the Hedged Value Fund, he adds, with Gargoyle taking the view that the time is right to venture into new investor markets.
Gargoyle specialises in sophisticated equity options strategies, including an overlay programme that is offered to institutional investors who want to hedge their own equity portfolios using call options. It enables investors to collect premiums when selling the options.
The New Jersey-based firm was founded in 1998 by former US options traders Joshua Parker, Alan Salzbank, Charles Goodgal and Bruce Rogoff.