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Alternative Market Briefing

Chakra Capital finds shorts in a challenging environment

Monday, October 01, 2018

Bailey McCann, Opalesque New York for New Managers:

A new Boston-based manager has launched an equity long/short fund with a refreshing take - fund manager Gopal Reddy actually takes single name shorts.

The Boston-based onshore fund runs a classic long/short strategy that invests in listed equities globally. Reddy launched the fund in July of last year, and tells Opalesque New Managers that the first year has been an interesting proof of concept for the strategy. "When we launched it was a frustrating time for running a short book, there was little volatility and markets were going straight up. But now, the fund is as short as it has ever been and we expect to see more opportunities as volatility comes back and rates rise."

Reddy and his team analyze stocks based on four factors - corporate leadership, customers/sentiment, government, and capital markets. Reddy looks for trends based on how individual stocks react to these factors to determine whether to go long or short. It's a pretty straightforward process, he says, highlighting one example of a company that brought on new management in an effort to turn things around, but when that manager failed Reddy started shorting the stock. "It can work the other way as well, if we see management start to unlock significant value, then obviously we are going to go long that name," Reddy adds.

The portfolio typically aims for a 60/4......................

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