Monday, December 27, 2004
Interesting CDOs Snapshot from Opalesque 121704
Fund portrait: CDOs as hunting ground for pioneering hedge fund – up 20.55% YTD (11/04), one down month in 27 EIDESIS extracts deep value from Collateralised Debt Obligations. It's not everyone's favourite market: structurally complex and profoundly inefficient; lacking uniform documentation; the liquidity (especially of distressed paper) subject to inconsistent broker-dealer support... The Eidesis team nevertheless believes that it can achieve a 15%+ annual return as a combination of income and capital gain from a diversified, hedged and unlevered CDO portfolio. The fund has now a 27 months track record, and after a roaring 2003 with 76.06% is up in 2004 20.55% (including November).
CDOs are a $400+ billion, inefficient market, where all deals are private, handcrafted, idiosyncratic; where there is no ISDA-type standard documentation; where participants are often in the market for not entirely economic reasons (e.g., insurance companies will buy CDOs to get better returns per unit, or “rating”, than they do by purchasing senior securities with the same credit rating, but then need to blow the investments out, regardless of price, if the credit rating drops); and where the secondary market comes and goes, but is generally thin (and can verge on the non-existent.) The secondary market is growing, as most of the larger Wall Street firms are now making markets in specific tranches. In order to promote issuance, they must offer their institutional clients the hope of liquidity. But it is a market rife with inefficiencies, not well understood by many of its participants. CDOs can be created from a variety of asset classes, including high yield bonds, bank loans, investment grade bonds, consumer debt, among other asset classes. Eidesis concentrates on securities backed by high yield bonds, bank loans, investment grade bonds and asset backed securities.
The fund, now at $200m, is being marketed by the doyen of outsourced capital raising for hedge funds, Nomos Capital Partners, whose contact details are +44 20 7245 0245 or mark@nomoscapital.com No online Source
CDOs are a $400+ billion, inefficient market, where all deals are private, handcrafted, idiosyncratic; where there is no ISDA-type standard documentation; where participants are often in the market for not entirely economic reasons (e.g., insurance companies will buy CDOs to get better returns per unit, or “rating”, than they do by purchasing senior securities with the same credit rating, but then need to blow the investments out, regardless of price, if the credit rating drops); and where the secondary market comes and goes, but is generally thin (and can verge on the non-existent.) The secondary market is growing, as most of the larger Wall Street firms are now making markets in specific tranches. In order to promote issuance, they must offer their institutional clients the hope of liquidity. But it is a market rife with inefficiencies, not well understood by many of its participants. CDOs can be created from a variety of asset classes, including high yield bonds, bank loans, investment grade bonds, consumer debt, among other asset classes. Eidesis concentrates on securities backed by high yield bonds, bank loans, investment grade bonds and asset backed securities.
The fund, now at $200m, is being marketed by the doyen of outsourced capital raising for hedge funds, Nomos Capital Partners, whose contact details are +44 20 7245 0245 or mark@nomoscapital.com No online Source
# posted by Tom @ 9:41 PM 
