A value long/short approach to the Italian market

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Advisory firm Banor Sim has built a solid presence in Italy since 2003 betting on alternative and long/short equities.

Luca Riboldi (pictured), head of Investments at Banor Sim in Milan and advisor of Banor Sicav for the Italy Long/Short Equity fund says the management firm has grown its assets from €50m in 2003 to some €4bn today thanks to a structure that has most shareholders working full time for the firm.

Assets under management are €1.5bn, while the remaining is under MIFID and non-MIFID advisory. “We benefit from a very stable team which has been working together for the past 10 years on the buy-side global sectors research.  As a result of such dedication, we are able to put great emphasis on the Italian market, although we always keep the broader picture in mind in our analysis,” he says.

Giacomo Mergoni, CEO of Banor Capital, praises the firm’s ability to grow and retain talents. “This culture is particularly helpful in a country like Italy but works well in the UK too,” he says.

In fact, Banor’s sphere of influence is not limited to Italy, but it reaches London. The team is also evaluating opportunities in Asia and the US.

According to Riboldi, the positive performance is the result of a strong stock picking activity. “Our long/short stock picking works in strict relation to sector analysis. We tend to go for undervalued stocks which appear to have good value going forward and, when we see a convincing case, we can keep that stock for long. As per our short positions, we look for expensive stocks which have some sort of a catalyst within six months or an unsustainable business model which we believe could break down soon,” Riboldi explains.

Although Italy is traditionally a fixed income oriented market, long/short equity investing works well for Banor’s client base which is predominantly made up of family offices, institutional investors and some 650 individual clients invested in equities and bonds strategies.

“Italy offers a very interesting scenario for the long/short space, especially for foreign investors with an interest on Italy who cannot or do not want to time the market themselves. This is true for instance for those with long positions on the Italian real estate or luxury space,” Mergoni adds.

At the moment, the best opportunities in the long/short space are in the Media companies, local utilities and financials are seen as the most appealing opportunity in the country at the moment.

Stock selection process and plans for the future

“As part of our stock picking process, we follow some 250 companies and firms across 20 sectors. We build our valuation models and we review them weekly taking into account quantitative as well as qualitative variables and have the analysts to look at them from a regulatory point of view,” Riboldi says.

Looking ahead at the rest of the year, Mergoni says the main aim will be on reaching as many investors as possible.  “This means making our funds available to financial advisers, institutional investors and distribution platforms such as Allfunds, Fideuram, Fineco and Banca Generali,” the CEO concludes.


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