Conatus Capital Management is the latest hedge fund firm with roots to Julian Robertson Jr.’s Tiger Management Corp. to launch a long-only fund.
Greenwich, Connecticut–based Conatus has raised more than $160 million for Conatus Long Opportunities Overseas Fund, according to a regulatory filing.
The new long-only fund will essentially invest in the same longs as those found in the hedge fund firm’s long-short fund, Conatus Capital Overseas, Conatus says in the filing. However, the firm adds it may determine that certain investments held in the long-short fund are “not appropriate” for the long-only fund.
In the filing, Conatus says the investment objective of the long-only funds “is to generate superior risk-adjusted returns in excess of those of a designated equity benchmark on a sustainable basis.”
It will invest in all sectors, both in the U.S. and internationally. The fund also may engage in short sales “for hedging purposes,” even though the name of the fund has the word “long.”
In a regulatory filing, Conatus identifies six key factors that drive its investment decisions: the quality of the business, the quality of management, understanding the key drivers of the business, determining whether the firm’s perception is different from the consensus, its valuation of the business relative to the market and certain macroeconomic factors.
Conatus was founded in 2007 by David Stemerman, a Tiger Grandcub. He previously worked for Stephen Mandel Jr.’s Greenwich, Connecticut–based Lone Pine Capital.
At year-end, the firm said it was managing about $2.1 billion. Entities affiliated with Lone Pine have a minority interest in Conatus.
Last year Conatus was managing as much as $3 billion. However, its long-short fund, Conatus Capital Partners, lost money, and returns fell in the low single digits.
Like many among the Tiger set, Conatus made money on its longs and lost on its shorts, which helps to explain why it decided to launch a long-only fund.
Like many Tiger-related firms, Conatus is very concentrated, holding just 21 long positions at year-end.
However, unlike many in the Tiger long-short crowd, Conatus is not focused on technology, Internet, media and telecommunications stocks.
Its largest holdings at year-end were in beverage giant Constellation Brands, health care insurer Humana, drug maker Actavis, luxury goods retailer Tiffany & Co. and software maker Intuit.
We earlier reported that at year-end, about 49 percent of Conatus’s securities were invested in securities also held by Lone Pine, citing an analysis published by New York–based research firm Novus.
