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Opalesque Exclusive: Eidesis Capital`s recently launched short credit fund is up 53% YTD, structured credit fund is up 11% YTD, firm had predicted credit debacle in 2005
Convinced that the economic cycle was turning and that the rally, which followed last summer’s credit debacle was to be short-lived, Eidesis launched a dedicated short credit fund in November 2007. The Fund was designed to profit from the firm’s long-held thesis that unprecedented levels of leverage and proliferation of structured credit vehicles would exacerbate distress during a downturn. So far, the thesis and the timing have been spot on and Eidesis Special Opportunities II has gained 53% through mid-March. Overall, the Manager expects the fund to achieve triple digit returns as the slowing economy and rising corporate defaults impose further stress on the already distressed markets. By maintaining 100% negative correlation to credit, Eidesis seeks to offer investors a way to either profit from further credit distress or to hedge long credit exposures. Once the short opportunity runs its course, however, Eidesis expects to wind up the fund and aggressively pursue distressed situations in structured credit, which is where the firm’s Structured Credit Fund (ESCF) made substantial gains during the last cycle returning 165% during 2002-2004.
Eidesis fully expected a credit debacle and in a 2005 letter noted that “…structured credit investors have been for years engaging in fundamentall...................... To view our full article Click here
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