Shortlist: Best sub-$100 million hedge fund

Launched in 2007 the fund has had an outstanding track record since inception, with a 64% return over its first three years.

The fund is run by Jamie Carter, who was previously at Johim until June 2006 where he researched US companies with a particular emphasis on technology, media and telecommunication equities. He also helped to manage portfolios and moved to the small cap area.

The fund invests in European small caps. It will typically be 20% short and 70% net long with little or no leverage. The fund aims to return 15% a year with half the volatility of the market.

The investment philosophy is driven by fundamentals. On the long side the manager seeks to find best-quality growth companies, businesses whose managements have embraced a philosophy of maximising shareholder value, through either restructuring their operations or just ongoing good management. Companies whose business environment is deteriorating or where the manager can identify major valuation anomalies are shorted.

Stock selection drives the shape of the fund. There is no sector or country bias and the net long/short position and gross invested exposure is a product of the number of long or short opportunities that emerge from this research.

The size of any individual position is proportionate to conviction, but tempered by liquidity considerations. While the fund lets strongly performing long positions grow to become larger holdings, it typically caps these at 5% of portfolio value.

The manager does not believe the fund needs to hold large individual positions in small cap to generate exceptional returns. With this philosophy the manager is able to maintain a high level of diversity in the portfolio.

Fund facts
Full name of fund: SW Mitchell Capital Small Cap European Fund
Name of portfolio manager: Jamie Carter
Name of investment/management company: SW Mitchell Capital
Contact information: Susannah Wellesley Wesley (+44 (0)20 7290 4512; Susannah@swmitchellcapital.com; www.swmitchellcapital.com)
Launch date: November 2007
Assets under management: $74 million (at March 31, 2011
Net cumulative performance since inception: 68%
Annualised return: 18.7%
Annualised volatility: 10.38%
Sharpe ratio: 1.51
Strategy: European equity small cap long/short
Share classes: US dollar and euro
Administrator: Goldman Sachs
Auditor: Grant Thornton
Custodian: Goldman Sachs
Prime broker: Goldman Sachs Prime Brokerage
Legal counsel: Dechert
Domicile: Cayman Islands
Listing: Cayman Islands Stock Exchange
Management fee: 1%
Performance fee: 20%
Minimum investment: $100,000
Lock-in: none
Redemption/liquidity terms: monthly liquidity, one month’s notice