SEB Sissener Canopus

The research team met with Bjorn Tore Urdal, co-portfolio manager of the Sissener Canopus fund. The fund employs a global equity long short strategy with a Nordic bias focusing on a concentrated portfolio of 30-40 positions. The fund can also be opportunistically invested in HY corporate bonds (up to 20% of NAV). The investment process is driven by team's best assessment of a company intrinsic value, where strong emphasis is put on the analysis of cash flows. In fact by focusing on cash flows the team is able to compare different investments like-for-like (i.e. cash flows are cash flows regardless of business), while also cancelling out unwanted noise and risks (e.g. creative book keepings). On the short side, positions often show weak balance sheet associated with negative cash flow generation. Sector and industry coverage is defined within the 5-member investment team, with opportunities filtered based on pricing signals (vs. intrinsic value) and qualitative considerations. Importantly, the team aims to gain a “knowledge advantage” when analysing a company, management team, etc. Something that can be best achieved through geographic proximity (hence the Nordic bias). Position sizing is largely a function of risk/return contribution and balance to the overall portfolio and level of conviction. Portfolio weightings can range between 4-9% (structural positions) and 1-4% (tactical positions). Overall the fund employs a relatively active trading strategy, with the manager adjusting exposure particularly around events such as earnings releases. Gross exposure is normally 140-180%, while net exposure (40-60% on average) reveals the long-biased philosophy of the strategy. Nevertheless, the mandate remains flexible and can be net long, market neutral and net short depending on the managers market outlook.