Lars Munson has a strategy when looking for investment opportunities for his hedge fund, Manatuck Hill: Find small, overlooked companies. Some had stock prices around $40 before the recession, he said, but now trade around $2 or $3. That is where he finds value.
“We still find those ideas, even after the rally,” he said. “Small cap companies can take a long time for marginal value to show up and pay you.”
Munson, a partner at Manatuck Hill, spoke on a panel about hedge fund strategies at UNC Kenan-Flagler’s seventh annual Alternative Investments Conference on April 4. “Seeking Sustainable Yield” was the theme of the student-led event organized by the Private Equity Club, an MBA career organization. It brought together professionals, professors and students for a forum on industry trends in private equity, hedge funds and venture capital.
UNC-Chapel Hill has about 30 to 35 percent of its endowment invested in hedge funds, according to Jon King, president and CEO of UNC Management Company, which oversees the endowment. King said UNC Management tries to maintain a balanced portfolio, but they’re not afraid of risk.
“We have no problem with hiring a high volatility manager,” he said. “We pay attention to how it fits into our portfolio, not as a standalone.”
Tarik Dalton (MBA ‘05) agreed. He works in the investment management division of the N.C. Department of State Treasurer, agreed.
“All volatility isn’t bad,” he said. “It’s not going to discourage us from investing in a fund. The first thing I look for is what does the return stream look like.”
For John Larkin, senior managing director of Avenue Capital Group, the investment focus is now on Europe.
“Our firm is surpassing assets in Europe than other regions together,” he said. “Europe is the big focus.”
He sees hedge fund strategies becoming more and more specific at every level.
“On distressed [strategies] alone, distressed is becoming very industry-specific. Some distressed managers are looking to the energy space; some in shipment, some in alternative energy,” he said. “Teams that are very large are becoming very specific again in various industries, and regionally.”
Sponsors of the conference were Z Capital Partners, LLC, Purrington Moody Weil LLP, Royalty Exchange, SOLIC Capital Management, LLC, Plexus Capital, Laser Image Printing & Marketing, CFA Institute, Eurekahedge, HedgeCo.Net and the Private Equity Research Consortium (PERC).
The robust focus on private equity at UNC Kenan-Flagler extends from educational and career preparation for students – including the only student-run private equity fund at a top-tier business school – to the faculty’s research. Proceeds from the conference fund the Alternative Investment Fellowship, which assists selected UNC Kenan-Flagler MBA students gain summer internships with leading alternative investment firms.