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From Precy Dumlao, Opalesque Asia:
The investment team members of Neuberger Berman's NB Alternatives fund of hedge funds unit said they are positive on distressed investing and volatility arbitrage but are cautious on long/short strategies. The team also advised investors to understand their manager's counterparty management policies to appreciate their own exposure to any potential risks.
Distressed Investing
NB Alternatives predicted, in their recent 2010 Strategy Outlook report, that 2010 would still see more large- and small-scale bankruptcies. But this provides a great opportunity for distressed investors given the large volume of leveraged loan and high yield bond maturities coming due in the next several years. The ability to identify experienced, thoughtful, and disciplined managers will become increasingly important.
"We anticipate the distressed opportunity set to last for several years at a minimum, with hedge funds able to take advantage of an increased set of opportunities," the 64-page document said. It added that with the lower recovery rates for unsecured debt and the large volume of opportunities, these opportunities would require a greater level of due diligence.
Bankruptcies among large U.S. corporations accelerated in June last year as eight companies with more than $1bn in assets, f...................... To view our full article Click here
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