The fund's negative performance accelerated with a 19.7% decline in October, pressured by high interest rates, energy expenses, and strained bonds linked to Altice International, Brightspeed, and Aston Martin. In response, Arini has sold liquid assets to buyers such as Pacific Investment Management Co. and Oaktree Capital Management while cutting gross leverage to early 2022 levels. The firm also re-underwrote its five largest positions, which account for roughly two-thirds of net asset value, reaffirming their structural protections. Despite the sharp downturn, the master fund secured $389 million of inflows over the past week as part of a broader $1.5 billion raise.
Key points
Technical pressures like collateralized loan obligation buying limits and short selling e…: Technical pressures like collateralized loan obligation buying limits and short selling exacerbated losses across the portfolio.
Fund leadership reaffirmed its investment thesis on five top assets representing approxim…: Fund leadership reaffirmed its investment thesis on five top assets representing approximately two-thirds of net asset value.
Management maintains that its long-term structural capital duration will allow it to with…: Management maintains that its long-term structural capital duration will allow it to withstand ongoing distress in low-rated corporate credit.
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(Bloomberg) -- Losses at Arini Capital Management’s main hedge fund deepened in the final days of October, taking declines to 32% for the year, according to a letter to investors seen by Bloomberg.
The high-yield debt specialist suffered a 19.7% loss in October alone as credit markets remained persistently weak, the letter said. Against that backdrop, the master fund run by Hamza Lemssouguer re-underwrote each of its five largest positions, representing about two-thirds of its net asset value. It also saw $389 million of inflows over the past week, part of its $1.5 billion raise.
The fund “underestimated” the dislocation in CCC rated debt, which makes up the majority of the fund’s exposure, leading to a highly correlated portfolio, the letter said. It trimmed some positions and cut gross leverage to the lowest level since early 2022, while planning to build in more diversification.
“As for our core positions, let us be clear: Our conviction remains firm,” Arini’s letter said. “Mark-to-market volatility of this kind is inherent in a concentrated, contrarian mandate. The fund has the structural duration of capital…
The credit rating agency shifted its stance due to operational headwinds emerging across the medical device maker's core business units. This adjustment reflects heightened scrutiny regarding performance challenges within the firm's specialized product lines. Investors may face increased risks regarding future borrowing costs if these operational difficulties persist.
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