Saba Capital Management is a credit relative value focused hedge fund firm, established in 2009. The New York City based company is a spin-out of a Deutsche Bank proprietary trading group founded by Boaz Weinstein in 1998.
Video Saba Capital Management
History
The firm launched in August 2009 with $140 million and 15 members from Deutsche Bank. In March 2011, Saba was listed as the fastest growing hedge fund manager in 2010 by Absolute Return + Alpha Magazine. As of March 2017, Saba managed $1.7 billion in assets.
Maps Saba Capital Management
Strategies
Saba's hedge funds manage investments centered on three strategies:
Credit Relative Value
The relative value strategy focuses on identifying dislocations across the capital structure. It utilizes a long / short, market neutral approach in credit and equity markets.
Tail Hedge
The tail hedge strategy seeks to provide a cost effective portfolio hedge during periods of market stress and dislocation. This is implemented by investing primarily in credit default swaps ("CDS") on a portfolio of low spread investment grade companies. In addition, Saba opportunistically buys CDS on indices and high yield companies, as well as equity puts and related instruments.
Closed-End Funds
The closed-end fund strategy focuses on securities that are trading at significant discounts to NAV, thereby offering more yield than their underlying fixed income instruments - predominantly high yield bonds and loans.
Saba ETF
In March 2017, Saba launched the Saba Closed-End Funds ETF (Bats: CEFS), an actively managed ETF that seeks to generate high income by investing in closed-end funds trading at a discount to net asset value, and hedging the portfolio's exposure to rising interest rates.
Notable Trades
In 2012, Saba profited from the notable "London Whale" trade, which cost JP Morgan an estimated $6 billion on account of a failed investment in credit derivatives.
In 2016, Saba profited substantially from capital structure arbitrage trades in Linn Energy and Chesapeake Energy when it successfully backed the bonds in those companies that were highly mispriced relative to the equity.
Saba has been a large investor in closed-end funds and through its ownership stakes has led activist campaigns to get closed-end fund boards to narrow the discount between their fund's net asset value (NAV) and trading price. Methods used to narrow the discount have typically included open-ending the fund, liquidating the fund at its NAV or offering to tender the shares at NAV.
References
External links
- Saba Capital (company website)
Source of article : Wikipedia
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