MARK HILL - writer guy
Leeward Hedge Funds brochure
Hedge funds that actually hedge
Leeward Bull & Bear Funds
High performance — low volatility
Over the years, something strange has happened to hedge funds — they've stopped hedging.
Originally designed to reduce risk, hedge funds' over-reliance on commodities, options, derivatives, futures and currency speculation have made them amongst the most volatile investment vehicles on the market.
Unique in the marketplace, Leeward Bull & Bear Funds are true hedge funds — designed to provide consistent positive returns while minimizing risk and reducing volatility. The funds are actively traded, truly North American, long/short hedge funds that do not employ leverage, strictly limit sector weightings and maintain a rigid stop loss policy on long and short positions.
The result is a fund that lets private bankers and investment firms add a conservative element to their asset mix and reduce their portfolio risk beta without jeopardizing overall returns. For sophisticated individual investors, Leeward funds offer high-performance, professional management without the risky, roller-coaster ride of alternating spectacular returns and massive losses often associated with other hedge funds.
Here's how it works --
The Leeward Bull & Bear Funds are amongst the world's most actively managed. In our view, consistent, positive returns can only be realized by continually researching new opportunities for profitable stock selection and by constantly reviewing the current portfolio with a view towards timely profit taking.
We look for small to medium cap stocks at reasonable valuations with strong growth potential, a competent management team, and a sturdy balance sheet. We also tend to favor firms with a good cash position. On the short side, we're not overly concerned with market capitalization, but we do look for companies with poor potential for growth and weak financials.
Our research staff utilizes both technical and fundamental analysis and is backed up by a crack team of external forensic accountants. As well, our managers and staff personally investigate many of our potential buys and maintain close relationships with key business leaders and CEOs.
Our investment philosophy is simple — seek opportunities for growth, take a strong position in a timely manner, get out of the position once the major growth has been realized, move on, and do it again.
Bottom-up growth is a cornerstone of our investment philosophy.
It is our view that many funds suffer mediocre returns by buying entire sectors rather than individual stocks. No matter how much opportunity exists within a given market sector, there are always firms that, for one reason or another, under-perform the group. Over the years, we've seen too many managers who simply pick a sector then "drop in a fishing net" only to find their portfolio returns dragged down by these weaklings.
At Leeward Bull & Bear Funds, we buy stocks, not sectors.
A true hedge fund
Leeward Bull & Bear Funds are the first North American hedge funds that do not employ leverage.
In our judgment, too many fund managers have covered up inexperience, poor research and weak stock selection skills by relying on highly volatile instruments such as commodities, options, derivatives, futures and currency speculation. In a generally rising market this simple, but risky approach may, in the short term, produce reasonable results. But when the market flattens or declines, this dependence on quick and easy leveraged gains can more than wipe out earlier returns.
We've been in this business for a long time and we've seen many a high-flying fund quickly turn south once a bull market runs out of steam. It's a wild ride, and some people enjoy it. But our clients are not those people.
Leeward Bull & Bear Funds are designed to limit risk and volatility. So we do not use leverage. Our active management style, bottom-up approach, superior research and obsessively close monitoring of the market and of our portfolio lets us achieve first-rate results without exposing our clients to the frightening vicissitudes of leveraged investments.
We're successful because we only invest what we have.
Limited sector weightings
No sector may at any time comprise more than 30 percent of our portfolio and no single equity may comprise more than 10 percent of the mix. As well, the short portion of our portfolio is capped at 50 percent.
It is our belief that most managers, at some point in their career, fall in love with a sector or a stock — often with devastating results. By strictly limiting the weighting of any one sector and any single equity, we avoid this common pitfall and reduce overall portfolio risk.
Stop loss policies
Not only are total short positions capped at 50 percent of the portfolio, but, on short sales, Leeward Bull & Bear Funds automatically take profits once a 20 percent return has been achieved. And, understanding that not every opportunity works out as expected, we also maintain an inflexible 15 percent stop loss on long and short positions.
To further reduce risk, we limit our total portfolio holdings to a maximum of 40 firms.
Our investment philosophy replaces volatile leveraged instruments with an active trading model, careful and in-depth stock selection and constant portfolio monitoring. In our considered opinion, this can not be fully achieved with an overly large portfolio.
There's an old saying: Put all your eggs in one basket, then keep your eyes that basket. To do that, you have to keep the basket reasonably small.
Truly North American
In a market saturated with U.S.-only hedge funds, the Leeward Bull & Bear Funds stand alone as a truly North American investment vehicle.
Canada does much more than simply add six or seven percent to the size of our marketplace. It gives us access to the entire natural resources sector — a sector that often acts counter to the movements of the rest of the market.
To take advantage of opportunities in the Canadian natural resources market, we are not restricted to a fixed or limited national weighting. This is one more way the Leeward Bull & Bear Funds offer a unique investment product and minimize downside risk.
Leeward Hedge Funds Inc.
Leeward Hedge Funds is an independent, employee-owned investment firm headquartered in downtown Toronto, Canada with offices on Grand Cayman. We employ a full-time staff of nine managers, research analysts, and administrative personnel and retain the ongoing services of a number of independent professionals and service firms.
We currently market and manage three hedge funds — the Leeward Bull & Bear Fund L.P. for Canadian investors, the Leeward Bull & Bear Fund U.S. for American investors and the Leeward Offshore Bull & Bear Fund for European and other offshore investors. The funds are similar in investment philosophy, though there may be minor variances in the portfolio mix due to trading and timing anomalies.
Transparency and client service
Leeward Bull & Bear Funds are not mass-market products. Ours is an exclusive investment vehicle with a relatively small base of substantial investors who are with us for the long-term. For this reason, a close client-manager relationship is important to us and to our investors.
We send, via e-mail, a weekly update to all clients outlining recent movements in the portfolio and other news of interest.
Once a month, president and portfolio manager Brendan Kyne personally writes a lengthy commentary on the current state and future direction of the North American equities market. This market letter, delivered to our investors via e-mail, is similar to those expensive, subscription-only investment newsletters — exclusive, timely, market intelligence sent directly to you from one of the world's best money managers.
We also mail a detailed quarterly review and market outlook to all clients along with a current account statement.
As well, we provide our clients with password access to a secure section of the Leeward website providing current trades and an up-to-date list of portfolio holdings. Many hedge funds regard their activity and portfolio as trade secrets, but we've found just the opposite. The more information and transparency we provide, the more our clients seem to appreciate our unique offering.
Ethics and trust
Every member of our staff comes to us with impeccable professional and personal credentials. As well, no one is hired without the personal approval of our president Brendan Kyne.
To eliminate any possible conflict of interest, no Leeward employee or employee's spouse is permitted to buy or sell equities or trade on his or her own account.
To ensure accurate valuation of the portfolio, all Leeward Bull & Bear Funds are audited and valued monthly by an independent accounting firm.
Brendan Kyne (CFA) — founder, president and portfolio manager
Leeward Bull & Bear Funds are the tangible expression of Brendan Kyne's hard-won, personal investment philosophy that leverage, derivatives and risky sector allocation inevitably lead to excessive volatility and poor long-term performance.
Kyne, a leader amongst the new generation of fund managers currently re-defining and re-inventing the money management industry, is both an experienced business professional and an innovative, creative thinker.
A Chartered Financial Analyst since 1992, Kyne graduated with a B.A. in Economics from McMaster University and launched his career as an analyst with Hughes, King and Company in 1988. That same year he was hired away by Acuity Investment Management Inc. to head up that firm's equity research and trading business.
In 1995 Driehaus Capital Management Inc. recruited Kyne to research Canadian securities. In less than 12 months, he was promoted to vice-president and tasked with expanding the company's Canadian portfolio. In just five years, Kyne grew the business from $45-million to more than $800-million.
Over the years, as his reputation has grown both domestically and internationally, Kyne has been called upon to provide commentary, insight and expert opinion to major media outlets including The New York Times, The Wall Street Journal, CBC Businessworld, Report on Business TV and more.
Today, fit, vigorous and energetic, Brendan Kyne, 40, actively manages the Leeward Bull & Bear Funds. A dynamic, hands-on, 24/7 manager, Kyne personally controls 100 percent of the Leeward portfolio and maintains close personal relationships with key business leaders and CEOs at firms across North America.
Leeward Bull & Bear Funds
Leeward Bull & Bear Fund L.P.
Offered to: Canadian investors
Management fee: 2%
Hurdle rate: 10%
Performance fee: 20%
Carry forward: Yes. Open-ended
Sales commissions: None
Minimum investment: $150,000 CDN
Leeward Offshore Bull & Bear Fund
Offered to: Overseas investors
Management fee: 1.5%
Performance fee: 20%
Carry forward: Yes. Open-ended
Sales commissions: None
Minimum investment: $100,000 US
Frequently Asked Questions
How are your funds unique?
Leeward Bull & Bear Funds are the only truly North American hedge funds that do not employ leverage.
Why don't you employ leverage?
In our view, leveraged investments introduce an unnecessary level of portfolio risk. While the returns may, at times, be spectacular, in the long run, the volatility and downside risk are not what our clients look for in a hedge fund.
Why, if you don't leverage, do you permit short selling?
Short selling allows us to realize positive returns in a declining market. However, we maintain strict stop loss and profit-taking standards to minimize short-side risk and limit our short positions to a maximum of 50 percent of the portfolio.
Without employing leverage, how can you achieve high performance?
We work harder. We actively seek growth opportunities amongst small to mid cap stocks with reasonable valuations. We research potential equity buys to an unparalleled level of detail and monitor our portfolio obsessively. As well, we're continually looking for short selling opportunities. It's a tough way to generate results, but it's less volatile and, if you're good at it, produces long-term, consistent, positive returns.
How do you minimize portfolio risk?
In addition to our rejection of leverage, we limit our total portfolio to a maximum of 40 stocks, limit any one sector to a maximum of 30 percent of the portfolio, limit any single equity to 10 percent, and on short positions take a profit once a 20 percent return has been achieved and enforce a mandatory 15 percent stop loss.
What is the advantage of being "truly North American?"
Including Canada in the portfolio does more than simply expand the market. Canada adds the important natural resource sector, which often acts contrary to the rest of the market and provides growth opportunities while the rest of the market is stagnant or in decline.
How big or small is your company?
Leeward Hedge Funds currently employs a full-time staff of nine and a number of outside professionals. We are right-sized — larger than a mere one-man boutique, yet smaller than a huge, impersonal, bureaucratic firm.
Who really manages the portfolio?
Brendan Kyne, our founder and president manages 100 percent of the fund portfolio. He's backed up by our team of researchers and analysts and by our outside specialists, but at the end of the day, Brendan Kyne makes the decisions.
Once I invest, what level of client service can I expect?
We'll provide you with a weekly report on portfolio activity, a monthly market update direct from Brendan Kyne, a quarterly market outlook, and Internet access to the current portfolio and recent trades.
What measures do you take to ensure trust and reliability?
No member of our staff is permitted to trade equities on his or her own account. Our portfolio is audited and valued monthly by an independent accounting firm.
Leeward Hedge Funds Inc.
1099A Yonge St. Toronto, Ontario, M4W 2L7, Canada
P.O. Box 309 G.T., Ugland House, Grand Cayman
Toll free: 1.866.LEEWARD