Centrecourt Serves Up Best Ideas Debt Fund

Aug 10 2007 | 11:52am ET

New York-based Centrecourt Asset Management has launched a “best ideas” fund derived from its flagship hedge fund. The new CAM Horizon Fund, which launched in February, has returned approximately 51% through July and is managing about $20 million in assets, a substantial portion of which is principal capital, according to sources with knowledge of the fund.

Like the flagship CAM Opportunity Fund, the Horizon fund makes structured investments primarily in debt, as well as equity and equity-linked securities of small-cap public and select private companies, according to fund documents.  Its investments are generally structured as collateralized debt securities with an equity component.

The fund was started at the request of investors and the fund principals’ desire to capture the alpha in holdings whose realization would be more appropriate for a fund with a longer lock-up, sources told FINalternatives.

“There were a few investments that they thought were too illiquid for the flagship fund that performed well and they wanted a vehicle in which to make such investments,” sources said. “So they decided to launch a ‘best ideas’ fund with a longer lock-up to take advantage of some of those ideas.  They capitalized the fund initially with principal capital and now many of their investors are starting to put some money into the fund, and, as did their first fund, this fund has performed very well out of the gate.”

Sources also indicated that the firm is currently well positioned to take advantage of the volatile markets. “The volatility in the equity and debt market is going to shake out capital that shouldn’t be chasing some deals and that’s going to play into their hands especially in light of the dislocations in the debt and equity markets right now.”

The Horizon fund charges 2% for management and 20% for performance, with a $1 million minimum investment requirement.  It has a two-year lockup period with monthly subscriptions and quarterly redemptions.   

Centrecourt is headed by Richard Smithline, chairman and CEO, who most recently served as a partner at Scoggin Capital Management, an event-driven, special situations hedge fund. Smithline was also a managing director at Wasserstein Perella & Co. and its successor, Dresdner Kleinwort Wasserstein, initially in leveraged finance and subsequently in the media, telecommunications and technology group and subsequent to that as a corporate and securities partner at a major Wall Street law firm.

Centrecourt currently manages approximately $400 million in total assets and is open for capital.

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