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Digital Subscriptions > The Hedge Fund Journal > Issue 142 – Aug 2019 > Cooper Creek: North America Long/Short Equity UCITS

Cooper Creek: North America Long/Short Equity UCITS

$110mm UCITS launch upbeat on US small/mid cap alpha

A growing proportion of institutional investors are prioritising a track record on the short side, according to studies such as the 2019 Credit Suisse Hedge Fund Investor Survey. Yet after a tenyear bull market in US equities, many managers struggle to demonstrate consistent alpha on the short book – let alone the absolute profits that Cooper Creek Partners has delivered – and some have even given up trying to pick single stock shorts. Of course, some managers are content for their short book to simply underperform their long book, while helping to finance the longs, and reducing overall strategy volatility. If this is the aim then using broad market or sector indices for part or all of the short book might well be appropriate. Cooper Creek founder, Robert Schwartz, only trades single stocks on both sides, and every position is intended to be a profit centre. Cooper Creek’s performance attribution at first sight seems atypical and uncorrelated in that the manager has sometimes profited on the short book and lost on the long book, during years such as 2017 when US equities rose. Shorts have made absolute profits in four of the past five calendar years, and in 2015 short alpha was a stonking 21.5%. Upon closer examination, Schwartz is something of a maverick who clearly has a contrarian streak: analysis of 13F filings and prime brokers’ lists of crowded holdings shows not only a minimal overlap with typical “hedge fund hotel” stocks, but also reveals that Schwartz is sometimes on the opposite side of such consensus trades.

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