Matthew Kratter, former head trader at Clarium Capital, last month launched a long/short equity hedge fund seeded by Clarium founder Peter Thiel and hedge fund seeder Borton Hermeneutics.
Kratter described the fund as a hybrid vehicle hybrid encompassing value investing, macro and options trading.
“We're looking for companies where the options market is saying they're more risky than what the fundamentals are saying; and then we arbitrage that difference,” said Kratter. “So we don’t have to be bullish on a stock; we just have to be sure it doesn’t go down a whole lot.”
He added the current market conditions are ideal for the fund because “we like seeing a lot of volatility and valuations come down. We’ve basically gotten both in the last few months where valuations are much more reasonable and implied volatility is still high.”
The $8.6 million fund was down 0.83% in its first month of trading.
It charges a 2% management fee and 20% performance fee. Its minimum investment requirement is $1 million.