Marin Capital Hedge Fund to shut down
Thursday, June 16, 2005 : PermalinkWEST PALM BEACH, FL (www.hedgeco.net) – Marin Capital Partners is shutting down according to company reports. The firm sees few opportunities in the convertible arbitrage and credit arbitragestrategies, its core trading strategies. The hedge fund company once oversaw about $2 billion in assets according to published reports. The management of the firm has since moved the company�s assetsto cash and in a letter forwarded to its investors, the leaders of the fund said it will stop trading at the end of June 30, 2005. Anton Nicholas, a spokesman for the hedge fund firm, confirmedMarin�s intention to close, but however declined to make further statements about the matter.
The letter stated, “Due to a lack of suitable investment opportunities in the current market environment, and in our view an unfavorable risk/reward situation in the relative value strategies we trade, Marin has moved the fund’s portfolio largely into cash, because we do not expect the opportunities to return in the near future, we have decided to return all capital to our investors.� Marin Capital may have become one of the victims of the recent losses in convertible arbitrage strategies which encountered significant losses following the downgrading of Ford and General Motors bond rating recently.
Hedge fund managers undertake over 70 percent of the trading in convertible strategies. Convertible bonds pay fixed-income yields like corporate debt, but investors in such strategy may also swap their notes for the stocks of the issuing companies. The high number of convertible hedge fund managers has created fewer and fewer arbitrage trading opportunities for managers using such strategy. According to published reports, about $2.8 billion in convertible arbitrage hedge funds were dumped during the first quarter of 2005.
The letter also noted, “Without conviction that there will be near term opportunities to generate sufficient returns on your behalf using appropriately hedged strategies, it is only prudent to make the decision to close the fund.� Tremont Capital Management reports that convertible managers lost 1.55 percent in May, after loosing 3.13 percent in April. John Hull and J.T. Hansen founded Marin Hedge fund in 1999. The managers said they were proud of their trading records, its flagship fund had returned about 98 percent with limited volatility since its inception.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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