Hedgie Plans Socially-Responsible Fund
Friday, May 14, 2010

Asset manager EquityStar Capital Management plans to launch a new hedge fund that will invest some of the firm’s profits into the economies of African Nations, wherever needed most.

EquityStar’s equity long/short strategy will aim for returns of 25-35% while attempting to keep volatility between 7-10%. The market neutral strategy will attempt to hedge most of the general market risk and volatility (including ones similar to the wild swings as of late) out of the portfolio. The new fund will launch on June 1, 2010 and expects to raise USD50m by September, with a target of USD 100m or more by the end of the year. Capacity of the fund is expected at USD1.5bn.

EquityStar Capital Management described itself as a "socially responsible, multi-strategy investment and wealth advisory firm." It provides asset management for institutional investors, retirement plan sponsors and certain qualified individuals. The fund will trade in the 1,500 most liquid global companies and is open to new investors.

By reinvesting some of the firm’s profits into African economies, EquityStar hopes to help give citizens of emerging nations the confidence to reinvest in their own economy by helping to open up their markets to free trade and encouraging foreign capital. 

EquityStar was formed as a Master Feeder structure to accommodate US, non-U.S, and US tax exempt investors. Steven Zoernack is the managing partner and chief investment officer of EquityStar : and serves as portfolio manager for the fund.

EquityStar says that the new fund "will utilize sophisticated quantitative systems using technology such as neural networks to optimize its investment selections and to attempt to produce a higher Sharpe Ratio, or risk-adjusted rate of return."

"Using a blend of fundamental and technical analysis, EquityStar will seek to generate positive absolute returns in rising, falling and volatile, range-bound markets," the firm explains.

"The 2008-2009 market deleveraging left many pricing dislocations within the capital structure," said  Steven Zoernack, managing partner and chief investment officer of EquityStar. "As a result there are multiple opportunities to capitalize on mispriced assets. Much of the global equity, debt, currency and commodity markets still retain valuable relative value and unique opportunities."

“We buy companies with good bottom up fundamentals and sell closely related companies that are overvalued in relation to the companies we buy while minimizing correlation to the overall markets," Zoernack added.