Portland Hill Asset Management moved into the black in the third quarter.
The London-based hedge fund firm headed by one-time II Rising Star Thierry Lucas posted a roughly 5 percent gain in its main fun during the three-month period despite losing money in September, according to an investor and several hedge fund databases.
As a result, the master fund is up 2.25 percent for the first nine months of the year. Portland Hill was down more than 16 percent in the first quarter, according to an investor.
Lucas, who grew up in Portugal and France, founded Portland Hill in 2011. He previously spent seven years at Eric Mindich’s now defunct multistrategy firm Eton Park Capital Management, where he was a portfolio manager and its first London employee.
[II Deep Dive: Hedge Fund Rising Star Thierry Lucas]
Portland Hill describes itself as a long-short fund applying a deep fundamental bottom-up approach to “catalyst-driven opportunities,” or event-driven plays. Its long book is heavily focused on mid-cap stocks — defined as market caps between $5 billion and $20 billion — which typically represent 60 percent of the portfolio.
The firm currently manages around $600 million.
The master fund was up more than 34 percent in 2019 and since inception has compounded at 7.9 percent through the third quarter, an investor said. It has delivered just one down year.
Its portfolio has a strong emphasis on Europe, which usually accounts for between 70 percent and 100 percent of the fund’s exposure and has averaged 70 percent since inception. At the end of June, France and Germany combined accounted for 41 percent of gross exposure.
The U.S. accounted for 18 percent of gross exposure at the end of June, a little higher than the 15 percent average since the master fund’s inception. It generally ranges between zero and 20 percent.
Entering the third quarter, the master fund’s gross exposure was about 190 percent while net exposure was roughly 30 percent.
Its top five single stock longs accounted for 35 percent of assets while the largest single stock fetched 11 percent of assets.
Since the first quarter, Portland Hill has been driven by a number of mid-cap long positions.
They include two companies that benefited from the global pandemic — Luxembourg-based Eurofins and Germany-based Gerresheimer —an investor said. In earlier client letters, Portland Hill described Eurofins as a world-leading food, pharma, and environmental-testing company. Gerresheimer is a healthcare packaging company that makes syringes and vials, which should see higher demand in the event of a Covid-19 vaccine and increased demand for flu shots.
Other profitable European longs include German chemical distributor Brenntag, French telecom servicer Iliad, U.K. pet supply retailer Pets at Home, Netherlands-based specialty chemicals and food ingredients supplier IMCD, and British specialty chemicals company Croda, per the investor.
Several shorts have also done well, including bets against British retailing giant Marks and Spencer Group, Orange S.A. (formerly France Télécom S.A.), and U.S. billboard outfit Lamar Advertising.
Meanwhile, the firm’s smaller Portland Hill SICAV Catalyst Driven Strategy Fund is up 3.4 percent for the year, according to an investor and a hedge fund database. It added 30.6 percent in 2019. The fund invests across the capital structure based on fundamentals, and targets roughly 25 trading ideas.
The firm’s long-only European ESG vehicle (SICAV – European Long Only) has lost about 7.2 percent for the year through September as the Eurostoxx 600 index dropped 14 percent. Last year it was up 41.3 percent compared with 23 percent for the index, according to the investor.
The little-known Global Explorer fund — a thematic ESG long-short product launched January 1, 2020 — invests globally. Roughly one-third of assets are invested in each of Europe, U.S., and the rest of world. Global Explorer returned 14.7 percent for the year through the third quarter.
