At E World Holdings, we understand that real estate investing can be a lucrative endeavor, but it all depends on the market in a given area. Political upheavals and social concerns can have a deep impact on how the market performs in a given community. A recent and very relevant example of this is in how the Brexit issue has affected real estate in London. Even across the ocean in the United States, American investors on Wall Street are looking at the London real estate market with hungry eyes, realizing that the Brexit decision will impact property prices making it a lucrative opportunity for some investors.
Mooring Financial Corp. is a $60 million hedge fund firm and is run by John Jacquemin, someone who has an extensive investing background. Under Jacquemin’s direction, Mooring committed resources to the London real estate market, even as other investors chose to look for greener pastures. The investment involves a fund that is traded on the exchange and tracks commercial property across the U.K. The fund looks at office space and other commercial real estate to determine value, but its own value dropped by 13% recently. It was then that Jacquemin’s interest was piqued and he directed Mooring to buy 100,000 shares of the fund.
Other investors may be scoffing at the move, but Mooring has a history of taking risks that ultimately pay off. The firm mostly invests in commercial real estate loans, so this recent move isn’t unusual for Mooring, except in that the purchase was made after the shares took a significant dive. Mooring can afford the risk though. While the S&P 500 took a 0.7% drop and other hedge fund firms scrambled to keep up, Mooring reported a 21% gain. The 100,000 shares acquired by Mooring equates to approximately $750,000, or about 1.35% of the firm’s holdings.
Discussing the buy, John Jacquemin said that the British pound’s 10.7% drop since the Brexit vote caused the fund to drop to an attractive price. The fund, identified as IUKP, is exceptionally cheap now, so Mooring took advantage of the situation. Jacquemin added that he feels the losses in the U.K. economy are an overreaction to the Brexit vote, so he expects prices to regain their buoyancy in the future. Although still at a historical low, the British pound rose to $1.329 against the value of the U.S. dollar.