Robert Lacoursiere and James Fotheringham, the former partners at Paulson & Co., quit Paulson earlier this year to set up Petrarca Capital, a hedge fund focusing primarily on the financial sector. Unlike Paulson, the Petrarca Capital believes that opportunities lie in countries like Russia, India, China, Brazil, Turkey, and Chile.
The marketing material sent by Petrarca capital to potential investors as reported by Amy Or of The Wall Street Journal, states, “(These countries are) levered to changes in global growth, and financials securities most sensitive to their domestic economies.” Petrarca says it will invest money based on the expected policy response and macro inflection signals. The document further said, “The financials sector is a levered play on macroeconomic cycles. Performance dispersion is now increasing among global financials sector stocks.”
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Petrarca says that countries like France, Germany, and Italy offer the lowest investment opportunities, while the USA is moderately attractive. At Paulson, Lacoursiere and Fotheringham managed $10 billion, in over 70 financial positions for seven years.
The ex-Paulson mates have a different belief than other asset managers. They say that constant stress on European financial system would lead to deleveraging through the sale of noncore assets, and the same will be the condition of the US financial market. Petrarca is still in the process of raising money to start the fund.
With their start up, Petrarca Capital, Lacoursiere and Fotheringham plan to invest in 20-25 long positions and 20-30 short positions. They will be investing predominantly in banks, exchange, insurers, brokers, and asset managers with over $1 billion in market value.
On the other hand, the billionaire investor, John Paulson’s hedge fund continues to incur hefty losses, as his largest fund, Paulson Advantage Plus, is down 18 percent year to date, according to Kelly Bit of Bloomberg Businessweek. In July alone, the fund lost 2 percent of its value, and last year Paulson & Co. had lost more than half of its total value, due to John Paulson’s optimistic views on US economic recovery.