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November 15, 2005
Hedge fund rout comprises an opportunity
This year's slip-up for convertible arbitrage hedge funds has brought an opportunity in its wake. John Calamos, founder and chief executive of Calamos Asset Management, long one of the world's biggest investors in convertibles, says that the rout for hedge funds this year, after the funds misjudged a few big calls, has created the biggest buying opportunity in a decade.
"We see convertibles as being about getting the upside of the market at bond market risk," he says. "The market is undervalued right now. The last time we saw convertibles this cheap was in 1994. In fact it's cheaper now. We are buying as much as we can. As interest rates went up, the hedge funds leveraged up too much, and there were a lot of forced sellers, creating an opportunity for us." He also believes the European market is undervalued.
-FT.com-
Posted by su at November 15, 2005 10:35 AM