With $20 million in commitments: Former Psagot analyst launches new hedge fund

Businessman David Galperin and investment manager Emil Goldfarb are launching the hedge fund Centenario Capital. According to the fund's managers, it is starting out with investment commitments totaling $20 million and is currently in the process of completing its first closing.

Goldfarb will serve as a founding partner and Chief Investment Officer, and will be exclusively responsible for research, investment selection, portfolio construction, and risk management. In the past, he served as a global securities analyst at Clal Insurance and Psagot, as well as an analyst in the structured finance sector at Midroog, part of the Moody's group. Galperin, a founding partner of the fund, will lead business development, investor relations, and the construction of its business and operational infrastructure, and will not be involved in the ongoing selection of securities.

The fund is intended for qualified investors, and the minimum investment amount is set at $500,000. It will focus on stocks of small and medium-sized companies around the world, with a market capitalization of approximately $250 million to $10 billion. This is an area of activity where hedge funds have an advantage over institutional entities, which struggle to operate in these stocks due to relatively low liquidity. An institutional entity seeking to make a significant investment without affecting the stock price needs supply and high trading volumes, which are not usually characteristic of trading in stocks of small and medium-sized companies.

The fund plans to manage a concentrated investment portfolio of 15-30 positions. The selection process will be based on fundamental analysis using a bottom-up approach, including examination of financial statements, cash flows, capital structure, management quality, and the companies' competitive advantages. About 70% of the portfolio is intended for core investments in companies that, according to the investment manager's assessment, can generate value over time, and the remainder will be allocated to special opportunities, corporate events, and arbitrage transactions. The allocation is not rigid and may change depending on market conditions.

The establishment of the fund comes at a time when institutional entities are increasing their activity in the hedge fund industry, which manages about 100 billion shekels in Israel and includes hundreds of funds. In recent months, IBI acquired half of the Plutus fund for 15 million shekels, Meitav acquired the Trio fund for 30 million shekels, and Harel agreed to acquire Tulip for about 30 million shekels. At the same time, Menora is in negotiations to acquire 25%-30% of the Agility fund, which manages about 2 billion shekels, based on a valuation of about 300 million shekels. Phoenix is also examining entry into the field. For institutional entities, acquiring holdings in companies that manage hedge funds allows them to expand the range of investment products, add activity that generates management fees and performance fees, and retain investment managers through a more flexible compensation model. On the other hand, hedge funds gain access to the marketing, distribution, and operational systems of the large entities.