Louis Gargour talks about LNG Capital, his hedge fund firm, and about current opportunities within the European credit market.
Dec 20, 2013 1:41 PM EST
By Benedicte Gravrand
GENEVA (TheStreet) — Louis Gargour is a Wall Street veteran who has worked for Salomon Brothers, which was later absorbed by Citigroup (C – Get Report) and Morgan Stanley (MS – Get Report), JP Morgan (JPM – Get Report) and Goldman Sachs (GS – Get Report). His background is mainly in European credit and trading sales.
Gargour started Taurus Investment Management, Europe’s first long/short European credit hedge fund, in 2001. Taurus later merged with what was then a little-known London-based hedge fund shop called RAB Capital. This small shop grew to $7 billion in assets under management in 2007 — although that is now down to a few hundred million after huge losses during the financial crisis. By then, Gargour was out the door. In 2006 he left RAB to start his own London-based hedge fund shop, LNG Capital.
“We started LNG Capital with one principal fund, a European credit long short,” he recently told Matthias Knab on Opalesque TV. “That was the skill set we brought from RAB Capital or from running fixed income portfolios. We recently added a European credit long-only strategy and a foreign exchange systematic strategy. But the entire strategy is under our umbrella; all benefit from risk management and oversight by risk committees, very strong operational support and distribution.”
LNG was partly seeded by its institutional partners, Atlantic Asset Management and Montage Alternative Advisors, through a joint venture with Palmer Square Capital. Investment beyond that has come from family offices, private banks and funds of funds.
This quartile, the LNG Europa Credit Fund, the flagship fund, has just seen “the top quartile of performance during its entire life.” Its net year-to-date performance is up 15.2% (as of Oct. 31), following a 2012 performance of 19.5% net growth.
According to Gargour, opportunities in European credit are driven by different points in the macro economic cycle. After 2008, he explains, the U.S. stimulated its economy by injecting $350 million in the banking sector, bailing out Citigroup, Fannie Mae (FNMA), Freddie Mac (FMCC) and AIG (AIG – Get Report). Europe tried the same stimulus and injected 1 trillion euros in the banking system. That was followed by a bailout of Ireland, Portugal and Cyprus, and a partial bailout in Spain.