HDH founder launches event-driven fund
Charle Peza starts Thaddeus Capital in Hong Kong, concentrating on event-driven situations in north Asia.
Charle Peza has unveiled his new hedge fund, the Thaddeus Asia Event Driven Fund, which is being launched in Hong Kong. Until October 2006, he had been with the $800 million event-driven hedge fund HDH Advisors. That fund dissolved, with his ex-partner Huy Hoang subsequently opening his new fund, the HDH Master Fund, in Singapore.
The new strategy will invest across industry sectors and asset classes, with 85% of positions achieved via equities with the remainder allocated in fixed income and derivatives. With most stock liquidity prevailing in northern Asia markets, this means that Japan, Korea, Hong Kong, China and Taiwan will be the focus. The fund managers estimate that holding periods for positions will be three to six months and they will try to take positions as close as possible to the event that their research has identified, in order to steer clear of market risk.
Thaddeus will be taking long and short side positions on event situations, finding positive and negative catalysts principally in mergers and acquisitions and in restructurings, with other areas of opportunity including corporate distress, spin-offs, credit ratings changes and special dividends.
The fund will use strict liquidity policies with positions no larger than two days trading, and each average position size will be 3% of the portfolio.
Charle Peza will be chairman and CIO. Paul Sheehan has joined from long/short hedge fund John Locke Capital as CEO. No replacement for him at John Locke has been made in Asia. Five members of staff have also joined Thaddeus from HDH advisors, including Sophie Lee, a Korea research analyst, and the three members of the HDH operations team. Kevin Chan will be the China research analyst and he joins from Credit Suisse where he was trading an Asia event book. Each analyst will handle a portfolio of six or seven positions, with the whole fund running 25-30 positions at any one time at the outset, ultimately rising to about 40 positions.
The fund launches in May 2007, so start-up figures are not available yet, but the managers expect to raise $500 million within one year. Investors are expected to include funds of hedge funds, institutions and family offices. Fees are 2% and 20%. There are no lock ups, but monthly liquidity is available on 20 days notice. There is a 2% redemption fee in the first year, with that fee being paid back into the fund, not to the fund managers.
Target returns for the fund are approximately 18% gross on estimated volatility of 8-10%, although the fund isnÆt being managed to volatility targets. Thaddeus does not envisage significant leverage, running a gross position of 125-150%. Net exposure is estimated at 50%, with 30-35% in the form of equities and the remainder by way of fixed income.
Service providers are White and Case as lawyers, Goldman Sachs as prime broker and Citco as fund administrator.
Thaddeus was one of ChristÆs twelve apostles. He formed a proselytizing tag team with Simon the Zealot, along with whom he was martyred in AD65 by being sawn in half. Thaddeus is now known as the patron saint of both lost causes and the Chicago police department.
The new strategy will invest across industry sectors and asset classes, with 85% of positions achieved via equities with the remainder allocated in fixed income and derivatives. With most stock liquidity prevailing in northern Asia markets, this means that Japan, Korea, Hong Kong, China and Taiwan will be the focus. The fund managers estimate that holding periods for positions will be three to six months and they will try to take positions as close as possible to the event that their research has identified, in order to steer clear of market risk.
Thaddeus will be taking long and short side positions on event situations, finding positive and negative catalysts principally in mergers and acquisitions and in restructurings, with other areas of opportunity including corporate distress, spin-offs, credit ratings changes and special dividends.
The fund will use strict liquidity policies with positions no larger than two days trading, and each average position size will be 3% of the portfolio.
Charle Peza will be chairman and CIO. Paul Sheehan has joined from long/short hedge fund John Locke Capital as CEO. No replacement for him at John Locke has been made in Asia. Five members of staff have also joined Thaddeus from HDH advisors, including Sophie Lee, a Korea research analyst, and the three members of the HDH operations team. Kevin Chan will be the China research analyst and he joins from Credit Suisse where he was trading an Asia event book. Each analyst will handle a portfolio of six or seven positions, with the whole fund running 25-30 positions at any one time at the outset, ultimately rising to about 40 positions.
The fund launches in May 2007, so start-up figures are not available yet, but the managers expect to raise $500 million within one year. Investors are expected to include funds of hedge funds, institutions and family offices. Fees are 2% and 20%. There are no lock ups, but monthly liquidity is available on 20 days notice. There is a 2% redemption fee in the first year, with that fee being paid back into the fund, not to the fund managers.
Target returns for the fund are approximately 18% gross on estimated volatility of 8-10%, although the fund isnÆt being managed to volatility targets. Thaddeus does not envisage significant leverage, running a gross position of 125-150%. Net exposure is estimated at 50%, with 30-35% in the form of equities and the remainder by way of fixed income.
Service providers are White and Case as lawyers, Goldman Sachs as prime broker and Citco as fund administrator.
Thaddeus was one of ChristÆs twelve apostles. He formed a proselytizing tag team with Simon the Zealot, along with whom he was martyred in AD65 by being sawn in half. Thaddeus is now known as the patron saint of both lost causes and the Chicago police department.
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