Park Place bearish on Europe

Hedge fund managers Park Place International are bearish on Europe, having significantly reduced equity and increased their cash position on their European fund.

The company's Galileo fund is a multi-discipline fund that invests primarily in European, especially Italian equities.

The fund is not gearing at this point, has reduced its holdings to 40 or 50 positions and, although the company won't go so far as to definitely predict a bear market, they will wait and see.

Manager Giuseppe Ciardi has generally kept the fund pointing towards long positions in the past. Now, things have changed. At the end of last month, Galileo was 26% net long, where it has stayed. But the historical average net long exposure has been significantly higher than that, with a net long exposure at 92% since the fund was started in 1997.

The investment team comprises seven people and visits around 300 companies per year, looking at stocks from a bottom-up perspective. Normally the fund is well diversified between different capitalisation numbers, but the team's attitude to Europe has pushed them away from small caps.

Philip Hands, one of Park Place Capital's partners, says: "Galileo is a European equities fund. The investment process is a bottom up, stock-picking approach. In less liquid periods like the market right now, we go to larger stocks."

The fund is currently underinvested and only has around 83% in equities. Hands says: "We tend to keep a fairly high concentration of our best ideas. At the moment the fund is underinvested. We have reduced our exposure significantly and now have around 40-50 positions. We were only around 83% equities at the end of July."

Dylan Emery