Point Clear Gains On Credit Market Pain

Aug 3 2007 | 11:55am ET

Fairhope, Ala.-based Point Clear Capital Management long/short credit fund has made healthy gains this year on the strength of its credit investments, or, should we say, the weakness of that market. Year-to-date, the Piedmont Fund’s short credit strategies are up between 14% and 54% through June.

Specifically, the Alpha 1 Fund and its levered versions, Alpha 50 and Alpha 150, are up 17.39%, 14.71% and 54.56% respectively. It is an off-shore structured credit fund with a short bias to exposure to the U.S.investment-grade corporate bond market. The fund implements its short credit position through the trading of credit default swaps.

The firm offers its funds in credit-linked notes, allowing it to issue different funds on the same platform, explained co-founder Lyle Minton. “So it allows us to customize and issue new funds for investors at very cheap margin costs. We set sensitivities for funds’ exposure to credit indices, specifically the CDX IG.”

Minton said the widening of credit spreads started “in earnest” in June with a broader correction still to come within the next several months. “We’re entering a very volatile medium-term environment where we’re seeing large movements of spreads both up and down. The average five-year spread for triple Bs is about 120 basis points and right now we’re at about 75 bps so we still have a ways to go to get back to the 10-year average.”

The sub-prime market is just the opening salvo to be followed by a spike in corporate default rates, according to Minton. 

The Piedmont fund charges management fees of 50 bps, and a 20% incentive fee, with a $1 million minimum investment.

Minton also mentioned that the firm is currently in talks with investors about customizing a short-only strategy with more of a high-yield component and a more correlated long/short strategy.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

FINalternatives Most Popular

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

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.