Saturday, 31 January 2015
Last updated 1 day ago
Nov 28 2007 | 12:00pm ET
After his residential real estate and commercial real estate hedge funds gained whopping 1,000% and 80%, respectively this year (see previous story), Andrew Lahde is launching a new hedge fund to further capitalize on the credit crunch.
The new vehicle, the Short Credit Fund, will invest primarily in credit default swaps on various asset-backed securities or the indices that reference these securities, according to fund documents obtained by FINalternatives. The fund, to be launched by Lahde Capital Management next month, will also enter into credit default swaps referencing money center banks and broker-dealers.
The fund plans to short debt-related instrument via CDSs including the CMBX indices, the CDX indices, the LCDX indices and securitizations backed by automobile and credit card debt. It will provide limited protection from capital losses by investing nearly all of its assets in U.S. Treasury Bills and money market accounts, which will also act as the collateral required to enter into CDSs.
“Eighteen months ago, the general partner correctly predicted that the subprime mortgage market would suffer great losses resulting in an unprecedented credit contraction,” according to a presentation by the firm. “Since 2006, the general partner has also predicted the spread of the subprime mortgage market problems to the debt and equity markets, and the increase in risk premiums for all types of debt due to, among other factors, the perceived diminished credibility of the credit rating agencies. The general partner believes that risk premiums for most types of debt could continue to increase over the coming months or years.”
The minimum investment requirement for the Short Credit Fund is $1 million. It charges a 1% management fee and a 20% performance fee.
Prior to forming Lahde Capital Management in July 2006, Lahde was an analyst at Dalton Investments, a $1 billion Asia-focused hedge fund shop.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…