Cheyne Capital ManagementStore this angel in big sizeOver the eight years that it has been in business, Cheyne Capital has developed into one of the a lot of adapted firms in the European-based barrier armamentarium industry.
Set up in 2000 as a convertible and acclaim specialist by above Morgan Stanley men Jonathan Lourie and Stuart Fiertz, who accept formed calm for some 17 years, the close has complete a acceptability as an avant-garde and adept multiple-strategy asset administrator - with a history of reacting to periods of bazaar about-face by accession itself strategically to crop advantage of consecutive recovery.
With assets beneath administration of some $11 billion, a agents of over 200 humans and a advanced arrangement of some 34 abstracted investment products, funds and strategies, the close has accustomed a ample and ever-expanding belvedere above a ambit of altered asset classes.
It occupies a market-leading position in investment-grade acclaim (with a aggregation of some 22 humans managing about $3 billion of net assets in long/short and long-only products) and in sub-investment brand credit/event-driven strategies (with a added 25 humans and about $3.6 billion of assets).
Through its offices in New York and Hong Kong as able-bodied as its capital London base, the close is aswell breath in European and all-around equity, as able-bodied as in equity-related instruments, and runs a apartment of six equityfocused strategies - four of which produced allotment of added than 20% in 2007, with the added two announcement allotment in balance of 10%. And, in tune with the firm's aesthetics of consistently gluttonous to advance into areas of new opportunity, Cheyne is aswell developing a able belvedere in what the close describes as "new alternatives".
These cover called areas of specialised accounts like asset-based costs and absolute lending area it sees an befalling to accumulation from the contempo bazaar dislocations, the problems in the cyberbanking area and the accretion disintermediation of banks - at a time if abounding acceptable case lenders are focused on shrinking their antithesis sheets.
Few firms can avowal as assorted or as multistrategy a barrier armamentarium business as Cheyne. But the close begin itself in the eye of the acclaim storm endure autumn on anniversary of chief to cut its losses aboriginal on two of its abate specialised acclaim cars - neither of which is a barrier armamentarium and which calm represent beneath than 4% of the firm's AUM.
Compared to the rather added affecting credit-related contest - including massive writedowns by a lot of of the world's above banks and added big players in the market, alternating with a amount of acclaim funds dematerialization altogether - the problems at the listed Queen's Walk investment aggregation and with an asset-backed SIV structured acclaim costs car were hardly headline-deserving material.
The abatement in Queen's Walk's NAV - which, afterwards demography into anniversary the assets that accept been paid out, was ultimately just 13% to the end of March this year - was in actuality triggered by Lourie and Fiertz anecdotic the admeasurement of the problems in the US sub-prime mortgage bazaar afore a lot of of their peers.
As for the SIV, the ambagious down of the Cheyne car was the aboriginal of abundant agnate episodes at added firms area structured costs articles are accepting restructured or asleep as a aftereffect of the problems in the ABS and CDO markets and the systemic crisis in the asset-backed bartering cardboard markets.
The appulse on disinterestedness investors in the Cheyne SIV itself - abounding of whom formed over into added and added assisting investments aural the close - was limited. And its appulse on added and bigger locations of the firm's business, and on its abiding and commonly actual loyal broker base, has been minimal. Indeed, admitting the challenges of 2007, Cheyne's net assets beneath administration still grew by some 7% endure year.
"We were aboriginal into the acclaim crisis and we accept we are traveling to be aboriginal out of it," says Lourie. "The aspect of our business has been in responding opportunistically to articulation credibility in the markets and we anticipate this is addition of those opportunities."
He adds: "Our aesthetics has consistently been to crop the affliction early, action your way through it, assure yourself if you are in the eye of the storm and ensure that you are in the best and arch position accessible to crop advantage of the rebound."
Already the affirmation is arising that Cheyne is afresh accomplishing just that - and that the firm's big investment-grade acclaim team, in particular, is already starting to accumulation from the dislocations that accept addled the all-around acclaim markets and laid low a amount of its aeon over the endure year.
Led by John Weiss, the group's flagship Cheyne Long/Short Credit armamentarium is already up by some 5.5% this year - at a time if several of its big rivals are continuing to address baptize - and the aggregation is award a ambit of relative-value trading opportunities to accomplishment the boundless accent in the higherquality acclaim markets.
The accumulation has steered bright of some of the added baneful instruments in the constructed acclaim amplitude - such as the now-notorious CPDO instruments, area it appears that a modelling 'glitch' may accept acquired the agencies to accredit triple-A ratings to articles that should accept been rated several notches lower.
"We were accepting courted by all the investment banks to do CPDOs," says Weiss. "But we just couldn't get adequate with the anatomy and the risk/reward profile."
Instead, the accumulation is absorption its absorption on constructed acclaim articles involving alone the world's best accumulated credits - with its awful accomplished acclaim appraisal aggregation active abundant proprietary appraisal on the 700 or so a lot of creditworthy companies globally and application structured acclaim positions to accurate axiological acclaim views.
"Everything we do is synthetic," says Weiss. "It is actual simple to accounts the positions. The clamminess in acclaim derivatives is actual good. Dealing spreads accept captivated up actual able-bodied in the sector. And, admitting all the abrogating predictions, the acclaim derivatives bazaar is continuing to abound and advance all the time."
Over the endure six years Cheyne's longeststanding investment brand acclaim armamentarium has produced annualised allotment arctic of 20% - while the close has aswell tailored abundant bespoke acclaim investment strategies for its audience that accept about paid off handsomely.
In addition, the close is one of the better accumulated acclaim traders in the business, axis over some $6-8 billion a ages - and its awful breath access to acclaim armamentarium administration is in abrupt adverse to the delight of changeless and irenic managed articles in the market.
It is not just in investment-grade acclaim that the close sees opportunities. Cheyne is continuing to aggrandize into new acclaim areas, with the contempo hiring of a US high-yield debt aggregation from US-based SAC accessory Intrinsic.
The aggregation - led by Mattias Bullrich, cofounder of beat US acclaim close ARX Investment Management - has produced a able alpha with the firm's new US highyield fund, which is already up by some 3% back its barrage in February.
But the Cheyne principals aswell see befalling above the blow of the firm's complication of articles and strategies. In the event-driven and sub-investment brand acclaim space, the close has had a quiet time of backward - bearing a collapsed acknowledgment endure year and blockage collapsed afresh this year in a actual arduous bazaar environment.
But the team's abiding clue almanac continues to be one of the arch in the business - with an annualised acknowledgment on the flagship Cheyne Special Situations armamentarium still at about 14% back birth in May 2003, admitting the adverse altitude of the endure year.
The Special Sits armamentarium has aswell repositioned its portfolio - with added hires accepting brought in to addition its activities in the added able fatigued and afflicted amplitude - and Lourie is assured that, accepting asperous the storm in its space, the accumulation will be able-bodied positioned to accomplishment the accepted environment.
In disinterestedness strategies, Lourie and Fiertz are aswell analytic to add to the disinterestedness and equityrelated belvedere - which currently accounts for about 20% of the firm's absolute assets beneath management.
"We are analytic to abound the disinterestedness business selectively," says Lourie. "It is analytic to add to our disinterestedness platform, based on a fundamentally-driven aesthetics that fits in able-bodied with our acclaim approach."
Performance in the disinterestedness funds has been able - with the firm's Global Catalyst fund, an adept and high-vol all-around trading strategy, abiding about 27% endure year and now aback in absolute area afresh for this year afterwards a difficult alpha in January.
The long-running Cheyne Value Fund is assuming an annualised acknowledgment of some 20%, while the European Opportunities armamentarium - managed on a white-label base by ex-Morgan Stanley banker Casey Gard out of New York - is one of the a lot of connected abiding performers in the European long/short disinterestedness space.
And the principals see cogent opportunities to abound and advance the 'new alternatives' belvedere - area the latest action is the barrage of an energy-related basement investment fund, a abiding action that has already aloft some $700 actor from mainly institutional investors at its aboriginal closing.
"We are analytic to aggrandize in areas area we can actualize a acceptable bend and area we can get to assets area the amount hasn't been awkward out by the banks," says Fiertz. "Where we see gaps in the jigsaw, we will try to ample them."
So it is bright that the close believes that the accepted investment ambiance is of the blazon that has historically created the best befalling sets for barrier funds to accomplishment - and the faculty of activity and action is tangible.
But the close will not just coursing new articles and strategies for the account of it. "We will consistently attending at new strategies and areas, but we charge to be able to see acutely the befalling and to abstain the awash trade," says Lourie.
At a accumulated cardinal level, it is believable that Cheyne may one day chase the aisle taken by a amount of added arch European groups in affairs a pale to an institutional broker - although the principals are in no bustle to do so, admitting accepting some approaches in contempo years.
Conversely, the close may aswell crop stakes in added specialist asset administration firms - as it has auspiciously done with the Parisbased convertible band specialist Acropole, in which Cheyne owns a 33.5% pale - as a way of accretion its own reach.
And, in a business area managing relationships with humans is just as important as managing money, Lourie and Fiertz are appreciative of the adherence and constancy of the firm's investors over the years - abounding of whom accept been audience for the 17 years that they accept formed together, initially designing convertible investment strategies for Morgan Stanley's abundance administration audience in the 1990s - and aswell of the firm's own team.
"Having a bookish atmosphere - and adorning a ability of arete - are actual important to us," says Lourie.
Cheyne Capital is one of Europe's arch addition asset managers. Cheyne Capital Management (UK) LLP is authorised and adapted by the UK FSA and, alternating with added locations of the group, is a registered investment adviser with the US SEC. Cheyne launched its aboriginal armamentarium in 2000 and today manages net assets of about $11 billion above a adapted apartment of products. Cheyne currently employs over 220 humans with its primary offices in London, New York, Hong Kong and Bermuda.
Cheyne Capital Management (UK) LLP
Stornoway House
13 Cleveland Row
London
SW1A 1DH
United Kingdom
T: +44 (0)20 7031 7450
F: +44 (0)20 7031 7680
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