Liongate Feeds On Credit, Subprime Woes

Aug 16 2007 | 2:10pm ET

U.K.-based Liongate Capital Management’s $1.2 billion Multi-Strategy Fund, a fund of hedge funds, was up 2.12% last month, bringing its year-to-date returns to 13.66%. The firm’s smaller $107 million Select Fund, a more concentrated fund of funds, was also up, by 2.89% in July and 16.72% YTD.

The top contributor to Liongate’s Multi-Strategy fund was its exposure to fixed-income, which contributed 1.10% to the portfolio. The fund also gained on its short corporate credit exposure, profiting from widening credit spreads and rising U.S. sub-prime mortgage defaults.

 “July was a very good month for us but we’ve been bearish credit for quite some time,” Ben Funk, a partner at the firm who oversees its research and quantitative risk management, told FINalternatives

“By the end of 2005, we got out of all of our long credit exposure because we thought the spreads were way too tight. It seemed like there was a lot more risks than opportunities. By January 2007, we gained exposure to both dedicated short corporate credit and three funds that had short sub-prim credit exposures. Those managers did quite well in July and if you look at out returns for this year, we’ve made most of our money in the months where the equity markets haven’t done very well. We think it will get worse.”

Funk added that there’s going to be great opportunities in distressed and credit space and he’s currently looking “mapping out” the current portfolio for the next three to 12 months. “We haven’t had any long credit or distressed in the books for a long time and we’re definitely doing our due diligence and making the rounds with those managers now.”

Liongate has a penchant for investing in mid-sized managers in the $300 million to $800 million range while trying to avoid the mature managers typically running too much capital and no longer aligned with investors. The Muli-Strategy fund, which began trading in April 2004, has achieved annualized returns of 18.81% since inception. Funk said the fund may soft close fund at $1.7 billion.


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

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.