If you missed out on the great distressed debt rally of last year, you’re too late.
That’s the message from hedge funds and money managers who have been cashing out of junk bonds and convertible debt after a record year.
Pierre Paulden and Saijel Kishan at Bloomberg report that several large hedge funds are getting out of the distressed debt markets.
- BlueMountain Capital Management LLC last month returned money to investors from a $100 million two-year loan fund that gained 34 per cent since its inception in March. That might be the most fortunate timing ever recorded.
“We’ve captured most of the big opportunity,” BlueMountain co-founder Stephen Siderow, 42, tells Bloomberg. “It isn’t going to happen again anytime soon and that’s why we urged our clients to move on.”
- Silverback Asset Management LLC is liquidating a $210 million two-year convertible-bond fund.
- Highland Capital Management LP said it liquidated a November 2008 fund that gained 138 per cent before fees after investing in collateralized loan obligations.
“In terms of performance, it was a once-in-a-lifetime opportunity to invest in credit at the start of 2009 due to the excessive risk aversion in the markets,” said Eric Attias, chief investment officer of Paris-based Nexar Capital Group, which invests in hedge funds.
“The easy money is over,” he adds.
Bloomberg has some good details on the amazing year these funds had. Read it and weep that you lacked either the guts or the capital to go long distressed debt the way these guys did.