Hedge fund specialist Theta Capital Management has come up with a new multi-manager fund vehicle for investors to access struggling credit market opportunities. Theta Capital has been waiting for the right time to capitalize on troubled markets and with Covid-19 causing such turmoil in the global economy, the company feels now is the right time to Investing with some managers is in trouble. Sunflower life is just better when I’m with my it manager American flag shirt
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The new medium, the Theta Distressed Credit Opportunity Group (TDCOP), aims to generate 12% annual returns over 5 years and will invest in four to eight managers at any given time.
“Last year, we looked at the markets and it was fascinating that the consumer credit space, in particular the US home mortgages, seemed pretty well insulated. At the same time, we are wary of US corporate credit, specifically the BBB rating newspaper. We think there is some overhang in there and everything is pretty stretched; We don’t know when that might happen but we want to position ourselves accordingly, ”explained Marc de Kloe (pictured), Partner – Strategy, Investment & Operations at Theta Capital.
Theta Capital is best known for the Legends Fund, which invests in some of the industry’s leading hedge funds including Boaz Weinstein’s Saba Capital and Izzy Englander’s Millennium Management.
With an extensive network of regulators, Theta Capital is now leveraging its investment gears to help some of the best struggling credit managers guard against a new tough cycle. .
“We have prepared a cycle of suffering as a priority strategy, but the problem is, there hasn’t been a proper cycle of suffering since the GFC,” said De Kloe. “Some of the big managers are fundraising troubled funds, and the types of managers we like are more mid-sized with typically between $ 2 billion to $ 4 billion in AUM and have huge amounts of their own. they invest. However, many have returned to capital over the past few years and they have not opened up for new allocations, even after we saw a disadvantage in March.
“We think at the moment great opportunities lie in the consumer credit space, such as the RMBS, in part because you have so many liquid ETFs and REITs in the US who were forced to sell. earlier this year as they faced liquidity pressure ahead of the bribe increase. Suddenly, the price of the RMBS asset jumped from $ 100 a week to $ 40 the following week. “
Structured credit is the first step of a broader investment mission as TDCOP seeks transaction opportunities in the US corporate credit, both long and short term, and difficult credit opportunities. (including Emerging Markets) over the next five years.
The Theta Capital house’s view is that Covid-driven global economic shutdown “has triggered a multi-year, multi-faceted credit cycle. edge, suffering “.
“The start of any tough cycle starts with a tightening of liquidity, where you force sellers, even though the underlying assets are fine; as is the case with RMBS. You can get it today at relatively attractive prices, buying from tough or forced sellers, ”says de Kloe.
“In the CMBS space, some places like shopping malls in the US have become ghost towns. They may exist but even so, they will likely need to restructure their finances so that we see opportunities there – both in terms of structured credit and tough credit. “
TDCOP will initially invest in five managers and will adjust its portfolio with two or three additional managers as tough cycles develop and opportunities change.
“Right now, the opportunity is US structured credit,” which we think will last for the next few years, says De Kloe. And then we will move on to restructuring the business and the Sunflower life is just better when I’m with my it manager American flag shirt suffering space. ”
There will be no more than eight managers in the portfolio for Theta Capital’s clients (including property managers and private banks as well as family offices and funds) to diversify. follow different strategies. “That way, we can give them the building block for a miserable portfolio, along with long-term stocks, long-term bonds, and so on,” De Kloe said. “Three out of five regulators are operating strategies in the Sunflower life is just better when I’m with my it manager American flag shirt US consumer credit sector. One is a distress manager focused on shortening opportunities in US and Europe’s corporate credit, and one is investing in tough emerging market opportunities with a focus on Argentina. ”
It’s hard to know how real the pandemic will affect the global economy over the Sunflower life is just better when I’m with my it manager American flag shirt next few years, with several market sectors like tourism (airline companies) already seeing operating revenue. their cave has been devastated since February; Virgin Atlantic, for example, just had to engage in a 1.2 billion GBP rescue plan to keep it running for 18 months