Hedge Fund’s Bet Against Spanish Banks Has Yet To Pay Off

Jun 12 2012 | 12:01pm ET

A hedge fund launched specifically to bet on Spain’s troubled banks has failed (so far) to profit from the crisis.

London's Capula Investment raised $500 million for the Capula Opportunities Fund which it said would capitalize on the "one-time" opportunity presented by Spain's struggling banking system, reports Reuters, quoting two sources familiar with the fund.

The fund bets on the price of credit default swaps and Spanish bank CDS prices have jumped in the past few months, but the Capula Special Opportunities fund returned only 1.9% in May and is down 3.8% year to date

Capula pitched the fund to a select group of institutional investors including the $50.8 billion Pennsylvania Public School Employees’ Retirement System. Reuters says a September board resolution recommended the pension invest  up to $250 million in the fund which was targeting net returns of 50% to 70% while limiting the downside to just 10% per year.

Capula was founded in 2005 by Yan Huo, a former electrical engineer with a doctorate from Princeton, and ex-UFJ International's Masao Asai. Goldman Sachs' Petershill vehicle bought almost 20% of Capula in 2008.

 


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...