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Bailey McCann, Opalesque New York: After the rough year hedge funds have had, delegates at the recent Opalesque Miami Roundtable suggest that capturing illiquidity premium will be the defining trades for the next ten years. Those trades are capacity constrained, and may require investors to hang in for longer than they are used to.
"What we are excited about is a narrow range of very specific opportunities, which are still largely the result of the 2008 financial crisis," says Patrick Stutz, of Bayshore Capital Advisors. "We see huge opportunities in what we call 'crisis aftershock trades.' Many of them require investors to have
a longer investment horizon in order to capture the attractive yields they offer."
According to Stutz, those trades are the result of banks pulling back from several segments of the credit market. He sees a long-term opportunity set in direct lending, asset-backed lending, trade finance and
various specialty finance opportunities. "Given the huge leverage banks employed pre-crisis, even a moderate retrenchment
results in substantial funding gaps which can be exploited by alternative investors. The second order of trades we take
advantage of comes from the need of big banks to clean up and optimize their balance sheets. Nonperforming Loans (NPLs) and
capital relief transactions offer attractive entry points at this stage," he explains.
Still, in order ...................... To view our full article Click here
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