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Alternative Market Briefing

Ferox Capital is launching new fixed-term convertible recovery fund

Friday, November 28, 2008

From the Opalesque Team: Ferox Capital Management, a London hedge fund manager founded by ex-JP Morgan trader Jeremy Herrmann, is launching a new fixed-term recovery fund – the Ferox Convertibles Recovery Fund – that seeks to benefit from the current extreme dislocation in global convertible bond valuations with low leverage.

The Fund is another addition to the Ferox stable. This includes the $700m main global convertible strategy Ferox Fund, which launched in July 2000 (down 24% YTD to Sept.), the $800m Ferox Bear Fund which is up 23 % YTD to October, and several specialist funds.

This is the third fund that Ferox has launched this year. In April, the firm launched a Japan convertible fund that offers investors a play on a future recovery of the Japanese equity market. And in May, the firm launched a convertible bond arbitrage fund that offers investors a play on the current theoretical cheapness of the convertible bond market.

Ferox Capital manages more than $2bln.

Opportunities in the convertible bond market According to Ferox’ fund managers, convertible bonds have been severely impacted by the deleveraging storm that has hit capital markets. Prices are now way below what might be justified by the overall deterioration in equity and credit markets. This was caused by a combined asset valuation collapse; a leveraged funding withdrawal; forced sales; hedge fund redemptions, and equity short-selling restrictions.

As a result, y......................

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