Alex Roepers Atlantic Investment Management released strong mid-year numbers in a letter to investors, with the US equity-focused Cambrian Fund up 12.4% YTD net fees compared to 8.4% for the S&P 500, while Cambrian Global is up 6.8% YTD, just below the MSCI AC World TR, which is up 6.9% over the same period (last year, the top value investor had a return of over 38.3%) Atlantic also announced that its assets under management have grown to $2.3 billion as of July 16 from $1.9 billion at the end of 2013, split $1.7 billion in its US-based funds and $600 million in the international funds.
Cambrian Fund increases Owens-Illinois, opens position on Triumph Group
The concentrated Cambrian Fund has 84% of its portfolio invested in just six positions, the largest being Owens-Illinois Inc (NYSE:OI), which Roepers says the fund has been increasing on weakness. The fund’s newest core position is Triumph Group Inc (NYSE:TGI) while Harman International Industries Inc./DE/ (NYSE:HAR) and Baker Hughes Incorporated (NYSE:BHI) were mentioned as having contributed to the fund’s outperformance this year. Roepers has also gotten strong returns from his active engagement with Cameron International Corporation (NYSE:CAM) and Oil States International, Inc. (NYSE:OIS).
“AJR/Quest our U.S. equity hedge fund, is also up solidly year-to-date, aided by the strong performance of the long book – dominated by our constructive activist positions noted above – as well as solid alpha generation from the actively traded short book,” said Roepers. The fund has 16 long positions contributing 88% long exposure and 28 short positions contributing 46% short exposure for a 42% net long.
Cambrian Global in line with index, while Cambrian Europe falls behind
The relatively new Cambrian Global fund (started in 2012 versus 1992 for the Cambrian Fund) is now 98% invested with 18 positions and has kept pace with the index net fees, while the Cambrian Japan, Quest Japan, and Pannotia funds are all up for the year relative to their benchmarks, though the letter didn’t say by how much. Only Cambrian Europe is down for the year in absolute terms, and it’s also falling behind its benchmark on a relative basis.
Roepers is bullish on global equities, citing low interest rates, reasonable valuations and 3% or higher global GDP growth driving corporate earnings. He apparently hasn’t had any trouble finding attractively priced stocks since Atlantic’s top 15 global long positions average just 8.7x EV/EBIT, and Roepers says that Atlantic has a lot of exciting potential investments that it’s currently working.