LJM Forges Ahead With New Funds Despite Drawdowns

May 11 2007 | 11:22am ET

Option-writing shop LJM Partners is forging ahead with fund launches and a new hire despite a double-digit drawdown last month. The Hinsdale, Ill.-based firm this week launched the LJM Offshore Fund, a Cayman Islands-based offering, and is also readying an institutional product, the LJM Preservation and Growth Fund.

LJM’s new offshore offering is a “moderately aggressive” product that trades put spreads and short calls on Standard & Poor’s 500 futures index contracts, according to firm documents.

The offshore fund charges 2% for management and 20% for performance, with a $100,000 minimum investment requirement.

The Preservation and Growth Fund, set to launch this summer, will target risk-averse institutional investors, trading short options on the S&P futures contracts and short futures contracts.

“The fund is negatively correlated to equities and is meant as a replacement for fixed income,” says managing director Scott Sykora.

The fund, which began trading in May 2006 with about $5 million, ended its first eight months up 4.74%, though it was down 1.18% year-to-date through April. It charges 2/20, with a $250,000 minimum investment requirement.

The firm’s Neutral S&P Option Premium Writing program was down an estimated 11.5% last month, bringing its year-to-date losses to an estimated 9.72%. Sykora attributes the program’s performance to a “coincidence of three outlier events that created a short-term challenge for the strategy.”

“The first event was the big sell off on Feb. 27, which was the biggest downside volatility we’ve seen since early summer of 2002,” he explains. “Within two weeks, the Fed met and issued their go-forward prognostication on future interest rates so the market almost perfectly rebounded up about 24 S&P points. We survived the whiplash pretty well and ended the quarter up about 2% net for our managed accounts.”

Anthony Caine, LJM’s president, admitted that the program suffered redemptions, but remains optimistic about its long-term capital appreciation potential. “What we tell our clients is that this is an investment that you must turn your back on for three to five years,” Caine says. “Over the long term we feel extremely good about the risk/reward profile.”

The program, which began trading in January 1999, returned 37.72% last year, according to public databases. It currently manages some $108 million in assets and charges 2/20 with a $1 million minimum investment requirement.

In addition, Stanislav Ivanov joined the firm last month as its chief risk officer from The Options Clearing Corporation, where he had worked as first vice president for quantitative risk management.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.