Saturday, 26 July 2014
Last updated 18 hours ago
Mar 23 2011 | 4:29pm ET
As their risk appetite grows, hedge fund managers are investing increasingly in financially troubled companies and employing a number of strategies to do so, according to a survey by Dykema and Reuters HedgeWorld.
The survey of 101 hedge fund managers conducted in January and February of this year found that a record 72% of fund manages reported having a portion of their portfolios invested in financially troubled companies, up from 65% in 2010.
Moreover, it’s a trend likely to continue in 2011: about 68% of the hedge fund managers surveyed said they expect capital to be more available to financially troubled companies in 2011, while 29% expect it to fall.
The survey showed that financially troubled companies continue to generate positive returns for the majority of hedge funds: 62% of respondents who invested in financially troubled companies have seen these positions increase in value.
Other survey highlights include the reviving popularity of loan-to-own strategies (29% of respondents reported participation in such strategies, up from 17% in 2010; 50% of these hedge funds had successfully acquired an ownership stake).
In addition, the majority of managers polled (58%) believed the Dodd-Frank Act would be ineffective in making the marketplace more transparent.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…