Zev Marynberg - Adar Capital Partners Ltd.
Adar Capital Partners Ltd. (“ACP”) provides investment advice to institutional investors, family offices, and private investment funds. The Adar Macro Fund (the “Fund”), ACP’s primary fund, manages assets in excess of USD 1.5 Billion. Led by its founder and CIO, Zev Marynberg, Adar has developed a very successful investment strategy and historical track record with their main focus on Latin American and European financial markets.
With over 25 years of global investing experience, management identifies unique investment opportunities through macro research utilizing a fundamental analysis of investments in emerging markets coupled with extensive local market knowledge of the countries in which Adar invests.
The team of ACP has more than 25+ years of experience in investment banking, risk management, and compliance. ACP has developed strong relationships with investment banks and institutions throughout the regions where the Fund invests. ACP manages its investment risk with a balanced asset allocation methodology and by maintaining low leverage ratios. Risk management is a core component in all of its investment decision processes.
The Adar Capital Partners Investment Process
- Focus in global investment opportunities in equity and fixed income assets in Europe and Latin America.
- ACP looks to create diverse and balanced portfolios to minimize market volatility.
- Adar’s “core group” of investments is managed to achieve optimal performance and build wealth in its portfolios.
- ACP’s research analysis targets investment opportunities that it believes can achieve maximal returns for investors.
- Enhanced due diligence of investments is critical and performed with on-site visits, calls with management and internal review.
- Safety is facilitated by core risk analysis and selections of investments with solid fundamentals.
- Management constantly reviews possible downside risk in each investment and performs risk assessments that place limits on aggregate investments and leverage.
Zev Marynberg, the founder and CIO of hedge fund Adar Macro Fund, offers his current views on the outlook for emerging markets.
To better understand the marketplace, we spoke with Zev Marynberg, the founder and CIO of hedge fund Adar Macro Fund. Adar Macro Fund is a hedge fund managed by Adar Capital Partners. Founded in 2011, Adar Capital Partners Ltd. provides investment advice to institutions, family offices and private equity funds mainly in Latin America and Europe. It currently manages a total of over 1.7 billion assets.
Q. What is your investment philosophy?
We concentrate in a few annual investments with mid-term horizons of 2 to 5 years. It all begins with a rigorous fundamental analysis and, after getting strong conviction, we make the investment and keep it until target monetization date, even when in the short term it does not perform as expected. Another important strategy is leverage. We have established strong relationships with leading investment banks and managed to obtain (and still obtain, despite balance restrictions) good conditions for leverage on high-risk assets.
Q. Which markets do you consider as EM when investing?
Our focus is macro and distress opportunities in Latin America, but we also analyse and invest in special situations in Europe and the US.
Q. Investors have been betting heavily on emerging markets stocks this year, and the strategy appears to be paying off. Can you give us your summary of the emerging-markets landscape right now?
It’s not very difficult to predict emerging markets performance when interest rates are stable at so low levels in the developed world. Unless this change, and it doesn’t seem will change very soon, the landscape for emerging markets is very promising.
Q. What were the main drivers of your performance this year?
On 2017 first half we have done +13.91% net of fees, mainly driven by our focus on EM and Europe. The attribution is mainly to YPF shares 20% up, Petrobras bonds rally, Ukraine sovereign bonds and Novobanco senior bonds in Portugal. Our bullish participation in Real Estate in Europe has also helped. Specially in TLG Germany, and in Neinor Homes Spain with more than 5% of the company, shares are up 22% since March IPO.
Q. Is this an appropriate time to get into investing in emerging markets or are yields too low?
There are always good opportunities in some markets, yield compression may continue. We don’t invest on an “average” portfolio, we look for opportunities we believe are unique at each time.
Q. What sets one emerging market fund apart from another and in particular the Adar Macro Fund?
The main difference is if you just invest on a diversified portfolio that reflects one or more geographic areas of the emerging markets, or as in our case you look to invest in 5 to 10 opportunities that you can analyse well and collect good returns over time.
Q. Why does the Adar Macro Fund invest mainly in Latin America and why is the main focus on securities issued or backed by nations or states?
Latin America offers a great advantage for investors. There are many sound companies that still trade at yields similar to junk bonds in the developed world. To invest should not be similar to purchase a lotto ticket. Latin America is where we have the deepest understanding, so we are able to find more opportunities. The true is that when you buy sovereign or quasi sovereign bonds, it is very difficult to lose money. A company can disappear and pay you back some pennies. A country continues to exist and haircuts will not be so high.
Q. During the second quarter of 2017, the fund significantly increased its holdings in Europe. How exposed are you to the UK and Europe?
The past few years investors underestimated Europe. We like that type of situations. We believe the Euro currency, real estate in Germany and Spain and even some bonds in Portugal offer outstanding investment opportunities. Nowadays the portfolio is allocated 45% to European markets. We assigned important sums to investments in fixed income securities in Portugal and equity securities in Spain and Germany as mentioned before. Spanish economy has become very dynamic and we expect further growth and strong demand for new apartments will be reflected in Neinor Homes stock price. Our top pick is Novo Banco long term senior bonds, still yielding 7%, per annum when any similar Portugal bank bond doesn’t yield even 4% per annum. In prices that means those bonds are trading between 30% to 50% below where they should be valued after the Bank has new ownership, expected sometime by the end of 2017. Where you can get such discount in a senior euro denominated bonds quasi sovereign bond?
Q. With a strong belief in the Euro currency, why REITs dedicated to eastern Germany seem to be of great interest?
We have a strong focus in Berlin. Still after 30 years of unification, the spread between prices in the west and the east is too wide. Further compression in yields and prices should happen over the next years.
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