Miami-based Concise Capital Management is currently raising capital for a hedge fund it deems as one of a kind. The firm recently received a $10 million injection from an international family office, with the promise of another $10 million for its Concise Capital Offshore Fund.
The fund’s strategy concentrates on short duration high yield bonds and has significantly outperformed the high-yield market with low volatility since its inception in April 2006, according to the firm. It was up 15.17% in its first nine months of trading and has returned 11.6% through November.
“It’s very much a niche strategy and we’re not aware of anybody else who is doing it,” said founder Glenn Koach. “We’re investing in short-duration—shorter than two years—under-followed high yield bonds. We focus on smaller issue sizes of around $150 million to $200 million purposefully avoiding the larger sizes that get most of the attention.”
Seventy percent of the fund’s portfolio is committed to a diversified universe of B- and B-minus-rated U.S. corporate bonds, and the remaining balance is spread across Canada, Europe, and Asia. Koach stresses that it’s not an emerging market fund.
Going forward, Koach said the firm is increasing the quality of its fund into doube-B-rated bonds on new purchases as well as shortening the duration of its investments to further reduce volatility. He predicts that the high yield market will remain benign through May 2008 so now is a good time to buy into the market.
“That being said, we’re maintaining our hedge because we still think there’s going to be volatility. On the long book we’re trying to reduce our volatility exposure but stay fully invested and on the short side we’re maintaining a healthy hedge on the Russell 2000, and that’s turned out to be a beautiful hedge for us,” he said.
Prior to founding Concise, Koach co-founded Riverside Capital Advisers, a high yield boutique focused on short-duration bonds, which grew to $400 million in assets under management.