The Nitrogen Fund is a long short equity hedge fund with an investment strategy that aims to be neutral (inert) to equity market movements and deliver absolute returns with low volatility in all market conditions. The Fund will be hedged with an aggregate low net market exposure. The Fund will take advantage of mispricing opportunities that are constantly evident in the equity markets to deliver superior risk adjusted returns to investors.
The Nitrogen Fund is managed on a fundamental basis with a value bias. The Fund is structured as a combination of two books; a long term fundamental book; and a short term trading book. The maximum net market exposure of the entire Fund is 42%; however this may vary between the long term book and the short term trading book. The long term book takes advantage of risk arbitrage opportunities where the manager views stocks as mispriced on a fundamental basis. The trading book takes advantage of arbitrage opportunities available due to short term mispricing in the market. There is systematic mispricing evident in the market due to market participants’ trading behaviour and the Fund takes advantage of this mispricing to deliver absolute returns.
The Fund’s investment universe includes stocks listed on the JSE Limited, as well as derivatives based on these stocks, and a small portion allocated to South African Over-the-Counter (OTC) unlisted stocks. The Fund’s underlying investment approach is to undertake detailed analysis of investment opportunities to ensure downside protection and a high probability of excess returns for a given level of risk.