Portfolio Manager Perspectives

Jeff Benjamin

Newest Evermore funds take unusual investment tack

Apr 20, 2010 @ 3:51 pm

By Jeff Benjamin

If gaining exposure to anything, anywhere in the world, strikes you as a sound investment model, you might want to take a look at brand-new offerings from Evermore Global Advisors LLC.

The funds, Evermore Global Value Ticker:(EVGIX) and Evermore European Value Ticker:(EVEIX), went live in January and hit the major distribution platforms a month ago.

A strong selling point should be the co-founder of the firm and chief investment officer, David Marcus, who has returned to the mutual fund industry after 10 years of running hedge funds.

Prior to that, Mr. Marcus, 44, worked for 13 years alongside noted value investor Michael Price at Franklin Resources Inc.

“These new funds represent the culmination of all of my background and my global network of relationships,” Mr. Marcus said.

He explained that the move back into the mutual fund space was driven by an opportunity to offer exposure to strategies that are difficult for most retail investors to access.

“I think the world has changed,” Mr. Marcus said, suggesting that investors are ready for mutual funds that encompass elements and strategies rarely found in registered mutual funds.

“We'll be using distressed debt, leverage, merger arbitrage, and we'll go long and short,” he said. “We will go anywhere in the world and invest in any part of the capital structure.”

The funds currently combine for just $20 million under management, but that's not stopping Mr. Marcus from employing his deep-value strategy.

The global fund is already positioned to take advantage of some of the economic challenges facing Greece and other parts of Europe.

The fund's allocations include a 40% weighting in Europe, 20% in the United States, 10% in Asia, 5% in Mexico and 25% in cash.

“Right now, the panic we're seeing in Europe makes us even more interested in investing there,” Mr. Marcus said. “Everybody is flocking to Asia because they think that's where everything is happening.”

The strategy is classic deep value, meaning it uses traditional analysis to identify undervalued stocks and sectors, and then looks for a catalyst that will drive the stock price up to fair-value range.

One example from his U.S. holdings is DirecTV Ticker:(DTV).

“The stock is very undervalued,” Mr. Marcus said. “There's a refocusing by management toward continued cost cutting, and they are likely to be eventually acquired.”

He also sees potential opportunity in the developing fraud case filed by the Securities and Exchange Commission against The Goldman Sachs Group Inc.

“My guess is, the government pushes forward with its case enough that it will create opportunities perhaps with Goldman or perhaps with other financial firms,” he said.

“There's always a crisis," Mr. Marcus said. "And there's always an opportunity.”

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.


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