02/06/2013

Zweig-DiMenna Offers High-Conviction Play

Zweig-DiMenna Associates has launched a more concentrated version of its original fund.

The 30-year-old equity shop began trading Zweig-DiMenna Focus Fund on Jan. 2 with $40 million from partners and a few early backers. Investors had approached the New York firm about designing a vehicle that would take a high-conviction approach to stocks, mostly in the U.S. The flagship Zweig-DiMenna Partners fund, a global long/short equity vehicle, has generated a 17% average annual return since its inception in 1984.

The management firm, led by Martin Zweig and Joseph DiMenna, has begun marketing the new fund in the U.S., with plans to target investors in Europe, Asia and the Middle East starting in a few months. The focus is on institutional investors, including sovereign-wealth funds. The fund charges fees equal to 1.5% of assets and 20% of gains, but early backers are being offered a discount. It’s the firm’s first new offering in eight years.

The Zweig-DiMenna Natural Resources fund, which began trading in 2005, has delivered a 9% average annual return.

Zweig was running Zweig Cos. and writing a popular financial newsletter, “Zweig Forecast,” when he hired DiMenna right out of college in 1977. They formed Zweig-DiMenna six years later. In 1999, DiMenna was featured in BusinessWeek magazine as “one of the best stock pickers no one has ever heard of.” At the time, the flagship fund boasted a 25% average annual return.

Today, the firm has about $2 billion under management and employs 60 people, including 26 investment professionals. DiMenna serves as co-portfolio manager along with Tom Keyes.

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