Covalis Capital’s Returns, AUM and Holdings

Zilvinas MecelisCovalis Capital is an employee-owned, London, United Kingdom-based hedge fund launched in May 2012, with offices in New York and George Town. Its Chief Investment Officer is Zilvinas (Zach) Mecelis, who was also one of its five launching partners, alongside Toby Mitchell, Jakob Moberg, Peter Murphy, and Rolanas Stikovas.

The 38-year-old Mr. Mecelis started his career as a Senior Analyst at Zimmer Lucas Partners in 2000. Three years later he obtained a B.A. in Finance from Pace University. While serving as a Portfolio Manager and Executive Officer at GLG Partners LP, he developed his investment management strategy, focusing primarily on European utilities. In 2009, he moved his team of senior investment professionals to commodities company Noble Group. Two years later he launched Arc Asset Management.

Zilvinas Zach Mecelis Covalis Capital

Covalis Capital invests in public equities, with an emphasis on equities of European OECD countries, and hedging markets. With coverage of 30 countries and roughly 300 different companies, 125-150 of these being active and under full coverage, Covalis’ industry experience covers a broad range of sectors. First, there are utilities such as electricity, gas, and water, followed by infrastructure, or to be more precise, energy and transport. Then, there are renewable sources, namely wind and solar, and finally commodities such as steel, base metals, carbon, fertilizers, iron ore, etc.

Although Covalis Capital’s returns fluctuated over the last five years, the fund can be proud of them being positive the whole time. For example, its Covalis Capital Master Fund Class A fund returned an astonishing 28.84% in 2013. In 2014 the fund’s returns decreased by over 20 percentage points to 7.29%, while in 2015 the fund got back on track with returns of 17.50%. The years 2016 and 2017 were steady for the fund, which returned 16.59% and 13.47%, respectively. However, from January to October 29, 2018, the fund’s returns had fallen back to 8.20%. Covalis Capital had a total return of 138.12%, and a compound annual return of 15.56%. Its worst drawdown was 5.36. As of March 3, 2018, Covalis Capital managed $701.67 million of assets of pooled investment vehicles and $84.62 million of institutional clients’ assets.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 96.9%, beating the S&P 500 ETF (SPY) by over 40 percentage points (see the details here).

At the end of Q3, Covalis Capital’s 13F portfolio counted 24 positions, with 12 of them being newly added ones. During the same period, 18 companies were dropped, so there was a great deal of turnover among its holdings. On September 30, the fund’s 13F portfolio was valued at $209.26 million. Even though none of the most popular stocks among hedge funds in Q3 of 2018 found a place in Covalis Capital’s equity portfolio, the fund’s returns through the years suggest that Zilvinas Mecelis and his team know where to invest. We’ll check out the biggest holdings and moves made by the fund during Q3 on the next page.