Kima Capital gets off to a flying start

The Australia-based pan-Asia long/short hedge fund is up 14% in its first six months.

It seems all the names that convey a sense of fluidity and liquidity have been snapped up by hedge funds (or by teenagers who have nabbed the domain name and want an obscene amount of money for it). Kima Capital's main investment criteria is liquidity, for both its portfolio and for its investors -- in a bid to capture that sense, Kima means 'wave' in Greek.

The Melbourne-based firm was founded by chief investment officer Justin Klintberg, who had spent the previous seven years investing for Marble Bar Asset Management, the last four of which in Melbourne. The chief executive is Michael Gallagher, a veteran of RMB Australia and Macquarie Bank. The chief administrator is Violet Fan, who used to work at hedge fund Tantallon.

The funds are named the Kima Pan Asia Fund and the Kima Pan Asia Offshore fund, the latter being a Cayman fund. The former is an Australia feeder fund that feeds into the latter fund, giving Australians a chance to invest. Both funds have a 1.5% management fee and 20% performance fee.

The strategy is pan-Asia long/short, but omits some of the less liquid markets of South and Southeast Asia. The fund employs three strategies: event-driven, arbitrage of stocks listed in multiple markets, and IPOs and blocks.

Performance from July to the end of the year was +14%. The fund has a target return of 12-18% annually, with very low volatility. Gross exposure limits are 150% and the net exposure limit is 50%. The fund runs about 20-30 positions on average and the single-name maximum loss is 70 basis points.

Deutsche Bank is the firm's prime broker, Kingsway Taitz the administrator, and Deloitte the auditor.

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