Former Lehman Traders Look to CRE

Chidem Kurdas

Could it be that commercial real estate presents

Pine River Among Favored Managers

Those funds of funds that survived the shakeout searched for new investments in 2010. What are the favorites? One of the names one hears is Nisswa.  

Closed Centaurus Fund’s Upside

In the middle of the financial meltdown in December 2008, Centaurus Alpha Fund went down like so many other funds. Investors rejected the management’s lockup proposal and so the firm decided to close the fund. Selling the assets in the portfolio and returning the money to investors took years. Meanwhile, of course, markets recovered. 

Credit Alpha Seen as Solution

What’s the outlook for fixed income investing? One line of wisdom has it that the future is not bright. Inflation and interest rates will go up, bond prices down. It probably is a bad time to hold an aggregate bond index.  Funds with credit expertise, however, are a different story. 

Apollo Senior Debt Fund

Chidem Kurdas

With the flow of leveraged buyout deals not likely to recover any time soon, big private equity firms are increasingly focused on other types of investments. Thus Leon Black’s Apollo is to start a fund to invest primarily in senior secured loans issued by below-investment-grade companies.

This is separate from the $400 million collateralized loan obligation Apollo is reportedly raising with JP Morgan as the marketer.

Lehman Veterans Ride Credit Cycle

Chidem Kurdas

Long/short credit funds were the top performers year-to-date as of July, returning about 7% according to Greenwich. That’s pretty good, considering that the Greenwich Global Hedge Fund Index is up only 1.3% while major equity markets are in the red.

In large part this a classic story of bottom feeding. Snap up paper that got labeled “toxic” in the crisis and became absurdly cheap. Then wait till prices start moving back to reasonable levels—which did not take as long as one might have expected from the severity of the crisis.

A credit fund that’s found favor with certain large investors is One William Street Capital Partners, started by David Sherr, who headed Lehman Brothers’ securitization business but left more than a year before the bank’s collapse in 2008. 

Ladenburg Thalmann Real Estate Hybrid

Chidem Kurdas

Investment bank Ladenburg Thalmann is to start a fund that will blend real estate and natural resource investments with hedge funds. The manager is Philip Blancato, who is the president of the firm’s asset management arm.

Andrew Lo Counts Uncertainties

Chidem Kurdas

If risk measures misled investors about mortgage-linked securities, what is wrong with the measures? Professor Andrew Lo of MIT offered a list of what’s missing from quantitative risk models. The root cause of the trouble, he suggests, is physics envy!

Former Citadel Traders May Cash Out

Chidem Kurdas

Solar Capital’s backers – well-known names in the hedge fund industry – have waited for years.  Will they exit in the coming months or stay in a holding pattern?

Repo Credit Lesson from Paulson Auditorium

Chidem Kurdas

A broker does a repurchase transaction with a hedge fund. Mortgage-backed securities are the collateral. The fund get short-term financing; the broker holds the securities. This market broke down in 2008 and never recovered to pre-crisis levels. What happened?