The new hedge fund, Stanphyl Capital Partners, LP., launched earlier this month out of NYC. Managing member Mark Spiegel reported the current AUM at $2M.
– Stanphyl runs a highly concentrated (three to ten “best ideas”) long-short equity strategy
– The long positions consist primarily– but not exclusively– of underfollowed microcap stocks
– The short positions consist of individual stocks and index and “macro” ETFs
– Investment decisions are fundamentally-based (both top-down and bottom-up), with technical analysis occasionally used to optimize entry and exit points
– There are over 8000 publicly-traded U.S. companies with market caps of under $500 million.
- The managing member believes that “outsized” gains can be made in these stocks due to the minimal attention paid to them by large institutional investors, while by using ETFs to establish well-timed index and “macro” positions, hedges (and often outright gains) can be created on the short side with minimal risk of being “squeezed”
– Using modest leverage, the strategy has generated a 26.7% gross annualized return since January 1, 2005 for the managing member’s personal portfolio
Spiegel is the managing member of Stanphyl Capital GP, LLC and is a NY-based equity investor. From late 2003 through early 2009 he was an investment banker (most recently as a Principal with Piper Jaffray & Co.) financing microcap public companies via private placement (“PIPE” and “Registered Direct”) transactions sized from $5 million to $100 million in companies with market caps of $50 million to $500 million. Prior to becoming an investment banker, Mark spent a year “inside” (i.e., working for) a microcap Nasdaq tech company.
Some Hedge Fund Highlights
• Volatility: Due to their reduced liquidity, microcap stocks can be quite volatile on a short-term basis, and this volatility is often compounded by the portfolio’s “best ideas” concentration and typical hold period of six months to two years. Thus, on a monthly basis the NAV of the portfolio can move around quite a bit.
• Investor Concentration Limitations: While Spiegel keeps the majority of his liquid net worth in Stanphyl, due to its high degree of concentration he limits each investor to placing no more than 10% of his or her liquid net worth in the fund.
• Occasional Very High Levels of Cash: Depending upon the availability of attractive investment opportunities (or lack thereof), there are times when Stanphyl may have much or all of its assets in cash. Spiegel is quite comfortable with the concept of “patiently waiting for the right pitch at which to take a swing.”
Editing by Alex Akesson
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