Saturday, 6 February 2016
Last updated 15 hours ago
May 6 2009 | 1:23am ET
Los Angeles-based hedge fund firm Dalton Investments has re-launched its distressed-debt strategy after a three-year hiatus.
Steve Persky, managing partner and CEO, and Swaraj Chowdhury, portfolio manager, will lead the distressed-debt team.
Dalton will initially focus on the most senior debt of large companies with significant business operations. As with its original distressed debt strategy, Dalton will invest primarily in companies that have positive operating earnings but are weighed down by excessive debt.
“Many companies that were taken private in the leveraged buyout feeding frenzy from 2004 through 2007 are struggling with excessive debt,” Persky said. “They are good companies with positive earnings, but they are trapped in ‘good deals’ that have gone bad. Nothing has changed with the basic businesses – someone just paid too much to take them private. We believe this is an opportune time to re-enter the distressed-debt market.”
After seven years of managing distressed-debt portfolios, Dalton Investments returned all capital to clients in the second quarter of 2006 because of a lack of compelling distressed-debt investment opportunities. According to the firm, the current challenging global economic conditions and an excess of easy credit have combined to produce a broad range of distressed-debt opportunities.
Dalton began managing distressed assets in 1999 when it concentrated on good Asian companies with bad balance sheets. The firm’s focus on distressed bonds evolved along with opportunities that included telecom, electrical generation and aircraft-backed bonds. Over the past year, the firm has been actively investing in distressed mortgage bonds. This new strategy will significantly expand the firm’s distressed-debt activities.
Dalton Investments is a registered investment advisor with the Securities and Exchange Commission. The firm currently has $1 billion in assets under management. In addition to the distressed-debt strategy, Dalton offers five investment strategies, including, a distressed mortgage strategy, Japanese equity long/short, Japan equity long-only, Asian equity long/short, and global equity long/short.