Tue, Jul 7, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

PAAMCO looks to Brazil to find returns outside of convertible arbitrage

Friday, May 10, 2013

By Beverly Chandler, Opalesque London:

Ronan Cosgrave is a director at $8.6bn US fund of hedge funds firm Pacific Alternative Asset Management Co, or PAAMCO for short. He is a sector specialist for convertible arbitrage, or convertible bond hedging, a sector that has considerably quietened since the excitements of the global financial crisis.

"It’s been a lean sector and out of favour recently" he says in an interview with Opalesque. These days, the sector’s name is something of a misnomer as there is little opportunity in the current markets to conduct the classic convertible arbitrage type trades in the US or Europe. "What we do now is more synergistic" he says. "We find opportunities in equity derivatives or Asian converts that are non linear or non 'standard'. We want to produce uncorrelated returns that are not adding to the same risk that everyone else is taking."

Convertible arbitrage underperforms when equities are flying but in a more negative market they should be included as a non-correlated part of a portfolio, offering a safe haven in choppy seas. However, convertible arbitrage didn’t do well in the biggest test of them all in 2008 – when in theory it should have – because everyone was highly leveraged. "When leverage lines got pulled you got forced selling which hit the returns" Cosgrave says.

Now, converts are dominated by long only......................

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. Opalesque Exclusive: New systematic strategy managed alongside research firm outperforms S&P500[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging CTA manager explains how he runs his strategy, which is based on an index produced by a research firm. Peter Turk is head of

  2. Opalesque Exclusive: New systematic strategy embraces machine learning[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The founder of a New York-based systematic trading firm, which offers a hybrid between alpha strategies and alternative feta at lower fees, describes his approa

  3. Larry Robbins' hedge fund Glenview buys 1m Tenet Healthcare shares[more]

    Komfie Manalo, Opalesque Asia: Glenview Capital Management said it bought an additional 979,482 shares at Tenet Healthcare Corp valued at $53.80 million, raising its stakes in the healthcare services company to 15.16%, reported

  4. Legal - Grayson’s hedge funds under scrutiny for possible ethics violations, Court rejects hedge fund’s motion to block merger of Samsung affiliates[more]

    Grayson’s hedge funds under scrutiny for possible ethics violations From Freebeacon.com: Rep. Alan Grayson is finding himself in hot water over managing hedge funds that bear his name, actions that are in possible violation of House ethics rules. Sitting members of Congress are prohibite

  5. Hedge funds decline in June as stocks tumble on Greek woes[more]

    From Bloomberg.com: Hedge funds posted losses across strategies last month as uncertainty over whether Greece will remain in the euro sent global stock markets tumbling. Winton Capital Management declined about 3.1 percent in June in its $12.1 billion Winton Futures Fund, leaving it down 1.9 percent

 

banner