Thu, May 5, 2016
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. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  2. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n