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Komfie Manalo, Opalesque Asia: Event Driven hedge fund sustained negative losses during the week ending
September 26 as the U.S. crackdown on tax inversion took a bite into the
strategies, according to data compiled by Lyxor Asset Management’s Weekly Brief.
Philippe Ferreira, Lyxor AM’s head of research, managed account
platform, said managers exposed to tax inversion deals underperformed
those managers with no exposure to this issue. Event Driven posted
negative returns in the region of 1.5% last week, the report said. All
but two funds ended in the red.
He said, "Last Monday (Sept. 22) the U.S. Treasury Department announced
a series of measures to crack down on deals in which U.S. companies
relocate abroad to lower their taxes. Several managers are exposed to
tax inversion deals such as Covidien vs Medtronic, Shire vs AbbVie and
Tim Hortons vs Burger King."
Managers invested in Covidien vs. Medtronic and Shire vs. AbbVie were
negatively impacted as the spread widened on the back of the new rules.
While there are fears that the new regulation means inversions will make
less or no longer economic sense, experts expect that these transactions
will ultimately pass muster, he noted.
However, Ferreira said that despite the negative impact on the strategy,
Lyxor stuck to its guns and argued that Event Driven remained one of the
strategies with the best potential. In matter of fact, the new rules
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