US Hedge Funds Expand into Europe

Recent news has been indicating an expansion by US hedge funds into the European market. Two such examples are Amber Capital and Ellington Management.

The first, Amber Capital, has raised $350 million (primarily from American institutional investors) for its Amber Southern European Equities Fund that will target southern Europe.  The hedge fund manager currently has a presence in London, NY and Milan. The new fund was launched at the end of last year with a goal of conducting business in an area that was quite recently at the hub of the Eurozone crisis.  Not to be deterred, the new fund’s portfolio manager Jose de la Rosa said,

“We are convinced that we are seeing the stabilisation of the macro in southern Europe. We are not expecting strong growth but we firmly believe that the structural reforms since the start of the financial crisis are starting to pay off.” In addition, southern European countries are facing a “slow re-industrialization.”  One example de la Rosa mentioned was the likely increase of Spanish auto production by 50 percent in 2014 since “Spain is increasing manufacturing for exports.”

US hedge fund Ellington Management (managed by Mike Vranos) at the end of last year also launched an office in London. This was done in part, with the hope of gaining UK mortgage-backed securities portfolios that are being auctioned by continental Europe banks.  According to Vranos,

“There was plenty of capital lined up to buy these assets four years ago, and there was more capital than assets for many years.  But now we have seen in Europe more motivated sellers on the bank side. The pressure has been turned up somewhat on the institutions.

These are just two recent examples of US hedge funds trying to make inroads into the EU markets.  If these – along with other similar stories – are anything to go by, Europe could be witnessing a much greater influx of US hedge fund management.

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