Fri, Feb 14, 2020 - Page 11 News List

Hedge funds buy the dip, bet on virus stabilizing

Bloomberg

As Wuhan, China, ended its first week of quarantine, Tribeca Investment Partners portfolio manager John Stover began to bet on a recovery.

“You can pick your own adventure in terms of what you read and how scared you want to get about it,” said Singapore-based Stover, whose firm manages about A$1.9 billion (US$1.28 billion). “But risk/reward has looked pretty good over the last couple of weeks.”

For many traders on Wall Street, the number of confirmed COVID-19 cases has meant a frenzied search for safe havens, but some hedge funds are looking for bargains.

Stover in July last year started the US$50 million Vanda Asia Credit Fund.

Despite the outbreak, Stover is getting interest from investors, and with annualized gross returns of 12.2 percent and volatility of 2.1 percent, last month was his best so far.

Predictions of post-outbreak bounces are not simply based on hunches, said Cleargate Capital LLC managing partner and portfolio manager Edward Bozaan, who operates a long-short hedge fund focused on Europe.

Bozaan told investors in a letter that markets ended higher in the six to 12 months from the first announcement of previous viral crises, such as SARS and Ebola.

“Once the number of cases has peaked and begins to fall, it will probably be an excellent time to add to the sectors hurt the most: travel, cruise companies, entertainment and emerging markets,” he wrote.

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