(Bloomberg) — Patrik Brummer, the 72-year-old founder of Sweden’s biggest and oldest hedge fund, is hoping to hire more equity traders to avoid a repeat of the unprecedented losses suffered this year.
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His $13.8 billion eponymous partnership wants to add new long-short equity vehicles to Brummer Multi-Strategy, the firm’s flagship fund that gives clients access to several independent, in-house strategies. The fund has lost 0.4% in 2021 while its benchmark index returned 7.4% over the same period.
“We are not happy with the return this year, and several of our strategies have had a difficult year,” Brummer said in an interview.
Amid the fund’s lackluster performance — coming after one of its best ever years in 2020 — the veteran of the hedge fund industry says his firm is now “prioritizing specialists within certain parts of the stock market, both in terms of geography and sectors.”
The recruitment drive is set against the backdrop of a resurgent industry as much bigger rivals like Millennium Management and Citadel lock-in investor cash for longer while building out multi-strategy businesses with hundreds of teams of traders.
But the appeal of Stockholm-based Brummer & Partners lies in its narrower range of mandates and the independence afforded to fund managers, according to its founder and chairman.
“Other multi-strategy firms have herds of totally anonymous teams where you don’t know who’s coming in and who’s going out,” Brummer said.
Brummer Multi-Strategy is currently made up of seven units that trade independent of one another. The optimal setup is “somewhere between eight and 13 strategies,” Brummer says, again in contrast to the likes of Millennium and Citadel.
The Swedish company has provided seed capital to two new London-based long-short equity strategies in 2021 and next year sees the arrival of Swedbank Robur’s Henrik Nyblom, who will leave his position at the helm of one of the largest technology funds in Europe to start a new strategy under BMS.
“We think Henrik has an edge in Nordic and European tech,” Brummer said.
Investors nursing losses this year will be hoping he’s right about turning things around. In recent months, the firm has been hit with two fund closures, including Frost Asset Management, and Mikael Spangberg, widely seen as the heir apparent to Brummer himself, quit as managing director of BMS after 10 years at the hedge fund.
BMS isn’t the only one hurting during a tough year for Sweden’s hedge fund industry. Informed Portfolio Management, a Swedish hedge fund that had relied on statistical models to devise its strategies, wound up its operations earlier this year after losing roughly $4 billion during the pandemic.
Alongside the appointment of four new partners this year as well as Nyblom’s imminent arrival, Brummer says he expects the flagship BMS portfolio to be “more liquid, geographically diversified and better equipped to meet the more complex market environment that we have gradually seen evolve in the past few years.”
Looking further ahead, the Swedish hedge fund manager has no plans to sell the business or seek an initial public offering. “The thought of being listed would be a huge distraction to us,” Brummer said.
The main goal remains to “create conditions for an eternal life for the company. I obviously strive to make myself dispensable and see myself as part of a team,” he added.
(The final quote was corrected in an earlier version of the story.)
(Updates with strategy in eighth paragraph, IPM in 12th)
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