Hardel Capital Unveils New Arbitrage Hedge Fund
Tuesday, February 15, 2005 : PermalinkHardel Capital has announced the launching of its new hedge fund. The Hardel Arbitrage Fund will exploit short-term arbitrage opportunities in equity options according to statements released by thefirm. The Fund is designed to produce annual returns in the range of 12-16 percent, with a volatility of 6-9 percent.
The new portfolio will be managed by two veteran managers, Tim Biggam and Lawrence McMillan. Mr. Biggam is the Chief Options Strategist with Man Financial overseeing a $10 million Arbitraged Account, as well as a $55 million Covered Call Managed Account. He was credited for Man’s Spread and Analytical Desk and Managed Accounts and Covered Call Program.
Mr. Biggam explained the trading philosophy of the new fund, he said,”The Fund Managers will take relative value positions when the implied option volatilities on the same underlying but different strike prices diverge from historic relationships.” He added, “In this situation the trader will construct a portfolio, long the cheaper options and short the expensive options. These trades are usually delta neutral to protect against market risks. A long option overlay is employed to vega and gamma hedge against tail risk. The trade is then unwound when the implied volatilities revert towards the mean.”
Mr. McMillan in his own right began trading in 1976, and in 1991, he founded the McMillan Analysis Corporation. He was formerly a Proprietary Trader for two Major Brokerage Firms, an author of several books, including “Options as a Strategic Investment”, he is recognized as one of the World’s foremost authority on Options.
The Hardel Arbitrage Fund carries a 2 percent Management Fee, and 20 percent incentive fee, the fund also carries a high water mark, aimed at providing investors with consistent steady returns according to released statement. The minimum investment requirement was not immediately provided.
More Details on the Hardel Arbitrage Fund can be found in the fund’s listing on the HedgeCo.Net Free Hedge Fund Database found at www.hedgeco.net.
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