Firetrail made the following statement on 16 October 2018 :
“After careful consideration, Firetrail Absolute Return Ltd, in consultation with Firetrail Investments Pty Ltd has made the decision, in the best interest of investors, to withdraw the initial public offering for ordinary shares in the company which was scheduled to close this Friday, 19 October 2018.”
Firetrail said a small number of shareholders “would have owned a large proportion of the company”, thus affecting liquidity in the secondary market which would create a “higher risk of the share price trading at a discount to the company’s net tangible assets.”
9 October 2018
Most investment funds offer investors investments in bonds, shares, property or a mix of these asset classes. Rarely does a fund offer investors a chance to invest in a way which is unaffected by an asset classes returns. However, Firetrail Absolute Return Ltd is offering just that.
Firetrail Absolute Return Limited (ASX code: FTA) will become a listed investment company (LIC) shortly. It is offering a market neutral portfolio of investments uncorrelated to Australian or global equity markets. It will achieve this neutrality by taking on a mix of long and short positions in Australian listed securities.
Market neutrality means the total value of long positions in the company will be equal to the total value of short positions. The aim of such a strategy is for short positions to fall in value relative to the long positions, thereby adding to the company’s total value on a net basis. Should the value of the short positions gain relative to the long positions, the total net value will fall.
In practice, the company’s long and short positions will not always be exactly the same and so achievement of market neutrality is more of a target on average than a precise rule. In order to limit the deviation from market neutrality, the company has set limits on the portfolio’s net exposure. The total value of long positions less the total value of short positions must not go outside the range of -30% to +30%.