Fri, May 22, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Opportunity and risk in convertible arbitrage

Friday, March 06, 2009

The following article is from Mohican Financial Management, LLC. Mohican is a hedge fund manager dedicated to convertible arbitrage with AUM of US$135m, mostly in managed accounts.

Let’s be clear The first and last requirement of good investment management is that the interest of the investor and the interest of the manager be one and the same. At the outset, the levels of opportunity to be pursued and the concomitant risk to be incurred must be clearly understood and agreed. In particular, investors should not be misled by the hordes of risk gurus and their large body of literature into thinking that there is a solid connection between popularized risk measures and every-day portfolio decisions.

Next, a scorecard that doesn’t separate luck from skill may be sufficient for games of sport, but investors demand better. They need to distinguish between two managers who post the same return over the same period of time. Investors are well served in this respect by alpha, beta and Omega Ratio; they are ill served by risk-adjusted return and other Gaussian-based measures that lack validity, especially when applied to the ideal fat head / thin tail return profile.

Finally, there is but one reason to incur risk, which is to pursue opportunity. Every investment decision by a manager must deal simultaneously with opportunity and risk in an attempt to optimize the mix. Yet a one-sided body of risk terminology and history of risk data has developed that ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Comment - Top hedge fund managers talk about how easy their jobs have gotten, BlackRock to Schroders warn of Argentina’s $20bn bond glut, The 35-year “investment supercycle” is drawing to a close, says Bill Gross, Gundlach: When the Fed starts hiking rates, 'GET OUT' of this asset class[more]

    Top hedge fund managers talk about how easy their jobs have gotten From Businessinsider.com.au: Time was, before the financial crisis hit, corporate boards treated multi-billion dollar hedge fund managers like Jehovah’s Witnesses pounding on their doors and flashing bibles. But no more.

  2. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  3. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  4. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  5. New market regime has created more dispersion between managers[more]

    Komfie Manalo, Opalesque Asia: The month of April has marked the transition toward a new market regime, Philippe Ferreira, Lyxor AM’s head of research, managed account platform, commented in the May 5's Weekly Briefing. "The first quart

 

banner