Sunday, 14 February 2016
Last updated 1 day ago
Jun 13 2013 | 10:09am ET
New York-based event-driven hedge fund Maglan Capital was up 14.63% (net of all fees) in May, thanks largely to a winning bet on Metro-Goldwyn-Mayer Studios.
The fund is now up 25.76% year to date and 80.36% in the last 12 months.
Maglan, which manages about $100 million, invests in liquid instruments across the capital structure of companies approaching or experiencing financial distress, bankruptcy or restructuring.
“Our differentiated strategy and mandate has enabled us to capitalize on unique distressed-related situations and generate out-sized returns even during a period of very low default rates,” said David Tawil, co-founder and portfolio manager, in a statement.
The fund's long book is currently made up of companies recently emerged from Chapter 11 bankruptcy, substantially undervalued to their peers, with growing revenues and cashflows.
Maglan’s investment in the equity of MGM Studios is a case in point. Co-founder Steven Azarbad said in a statement they “entered the position in 2011 after concluding that the company was undervalued and was in a great position to grow revenue and cash-flows by releasing new titles- principally, Skyfall (James Bond) and The Hobbit. The fund’s cost basis is $20 per share, and in May, the share price surged into the 50s, and it’s still undervalued in contrast to its peers, such as Lionsgate and DreamWorks.
“We have a number of undervalued investments currently in the portfolio and we’ve got a lot of fuel left in the tank for the remainder of 2013,” said Azarbad.
Maglan ended 2012 up 41%, net of fees and expenses.