TORONTO, Ontario (HedgeWorld.com)–Sprott Asset Management Inc. this summer closed one of its hedge funds while opening another, and in a recent report to investors expressed its glum outlook about the near to midterm future of the global economy.
Canadian-owned Sprott closed the Sprott Hedge Fund LP I to all investors on July 31, and launched the Sprott Hedge Fund LP II on Aug. 31. The new fund, like its predecessor, uses a long/short equity strategy, supplemented by arbitrage strategies, corporate-event opportunities, and the participation in some select private placements.
Sprott’s report reiterated its belief that ongoing drops in equity values are “world changing events,” heading the world toward a “Kondratieff Winter.” The company’s guiding thesis is that the underlying economy and the financial markets have an ambiguous relationship, sometimes reinforcing one another but at other times moving in opposite directions and compensating for one another.
“Like the grim reaper telling you your time is come,” Principal Eric Sprott, in collaboration with research analyst Sasha Solunac, wrote in its report to investors, “the pillaging that is taking place in financial markets can lead to a death spiral where both the economy and the markets chase each other down.”