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Alternative Market Briefing

Culross lists three outstanding investment opportunities, red-flags currency hedging (2)

Friday, November 28, 2008

Benedicte Gravrand, Opalesque London: This the second part of our Culross interview. See yesterday’s article “Culross’ FoHFs manager Blanshard forecasts ‘very severe’ GDP slowdown” here.

Nigel Blanshard listed “three outstanding investment opportunities,” going forward.

(1) Bonds and credit, for the spread “The very best scenario for investors would be if these credit spreads pushed out further and then stayed there,” Blanshard said.

Culross’ managers think that the inflection point will have come when bonds become attractive to the unleveraged buyer and that the opportunities are global. They are looking at seniority, possibly convertibles, going long and short (with flexibility and trading ability). They believe that, now, there is a huge opportunity that could extend for quite a while with big spreads, lots of confusion and lots of supply. Auto-loans and credit card receivables are deemed toxic, but the mortgage market is now throwing up long opportunities.

“There are ABX tranches segments that are trading near to nothing because the presumption is that there will be no coupon paid – whereas one just needs one coupon payment to get one’s money back, and another to double one’s money,” Blanshard noted.

The things to conside......................

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