Griffin tells more about the award-winning Griffin Eastern
Europe Value Fund and the people behind the running of the
- How do you define the approach of your fund?
The fund aims to achieve positive absolute returns on
a quarterly basis by uncovering and exploiting valuation
anomalies in Eastern European markets where the team has
ten years' investment experience. Alpha is generated primarily
through bottom-up stock picking using Griffin Research
Database. In a hostile market environment the fund manager
will attempt to protect capital by raising cash, switching
into fixed income instruments and entering selective short
- What are the key characteristics of your strategy
and how are you different from your 'peer group'?
The investment process can best be described as an opportunistic
bottom-up stock picking approach with an absolute return
bias. Investment candidates are analysed relative to their
global peer group using the Griffin Research Database.
Its multi-dimensional structure provides maximum flexibility
in analysing company fundamentals. Industry-specific models
allow a detailed comparison of valuation ratios, operating
profitability, cash flow generation and other parameters.
A top-down country macro check and stock liquidity are
used in determining the size of a position in the portfolio.
The fund is managed actively by using strict selling
discipline based on internal price targets which helps
free up funds for new investment ideas. The fund will
have a high cash level in a hostile market environment
or when there are no compelling investment opportunities.
The team adds significant value through stock selection,
which is based on a very detailed and disciplined fundamental
analysis. Strict selling discipline ensures that profits
are locked in and funds are available for new investment
ideas. We do not track any indices and therefore can avoid
"index dogs". The team has the best track record
in Eastern European equities over three and five years.
How do you identify long and short stock opportunities?
And what strategies do you employ?
The entire investment process is based on the Griffin
Research Database. This database has been programmed by
the fund management team with the assistance of external
IT consultants. It has a multi-dimensional structure and
provides maximum flexibility in analysing company fundamentals.
Industry-specific models allow a detailed comparison of
valuation ratios, operating profitability, cash flow generation
and other parameters. A DCF module enables the fund managers
to run DCF models on every company to establish absolute
price targets. The data input and maintenance is performed
by the fund managers to avoid data graveyards. Broker
research notes and company meetings are used to compare
forecasts of external analysts and company managements
with in-house forecasts and assumptions. In-house forecasts
and company data are constantly updated and amended. The
Griffin Research Database facilitates a disciplined and
somewhat standardised fundamental research approach and
ensures that up-to-date valuations on a large number of
companies are always readily available.
- What have your country and sector weighting been like?
As at end May 2004:
- What's your performance been like?
Since the fund became long-short from January 2002, the
fund has achieved in EURO terms +77.7% (+145% USD). Year
to date 2004 is +20.2% (end May 2004). The fund is consistently
one of the top-ranking funds over various periods in the
S&P Eastern European category.
How liquid is your portfolio?
At least half of the portfolio for Griffin Eastern European
Value Fund can be liquidated in one day, the other half
within one week.
- What risk controls and measures do you have in place?
The fund manager does not apply any formal risk control
systems. Risks are controlled through a high degree of
diversification and selling discipline. We define risk
more in terms of losing money in absolute terms than relative
to an index (tracking error).
When fund managers are convinced of one stock and have
done extensive and detailed research (and only then),
they are generally taking relatively sizable positions
of up to 10% of the portfolio. Fund managers believe that
really attractive opportunities do not come up too often
and should be taken advantage of to generate outperformance.
Those positions are monitored extremely closely.
- What's your background and how are the responsibilities
for running the fund divided between the team?
Both Jürgen Kirsch and Yuli Stein have been managing
the fund since launch.
Jürgen Kirsch is manager of Griffin Eastern European
Fund and Griffin Eastern European Value Fund. From 1993
until 1997 he was senior fund manager at Mercury Asset
Management in London where he had responsibility for research
and investments in Eastern Europe. He was manager of the
Mercury Eastern European Fund, which under his management
became the largest Eastern European fund with net assets
of over DM 1 billion. During Jürgen's tenure the
fund achieved a return of over 400%, outperforming peer
products by approximately 100%. The fund received numerous
Micropal and Lipper awards for best performance. Jürgen
was voted Fund Manager of the Year by the German magazine
Finanzen in 1996 and 2001.
Jürgen began his investment career with the British
investment bank S.G.Warburg, London in Corporate Finance.
He graduated in Business Administration and Economics
at Friedrich-Alexander University in Nuremberg.
Yuli Stein is fund manager of Griffin Eastern European
Fund and Griffin Eastern European Value Fund. From 1996
to 1997 he was a fund manager at Mercury Asset Management
where he focused on research and investments in Eastern
Europe. From 1990 to 1994 Yuli held a number of administrative
positions at the United Nations Secretariat in New York.
Yuli graduated with an MBA from Harvard Business School.
What other funds does Griffin Capital Management run?
In Eastern Europe we also have a UCITS long-only fund: Griffin
Eastern European Fund. In Europe we have a UCITS absolute
return fund Griffin European Opportunities Fund.