Arini Capital Management hedge fund losses reach 32 per cent this year
The high-yield debt specialist saw a 19.7 per cent decline in October as credit markets remained weak.
Losses at the main hedge fund of Arini Capital Management deepened to 32 per cent for the year in late October, according to a letter to investors seen by Bloomberg and reported by Mint.
The London-based firm, which specialises in high-yield debt, suffered a 19.7 per cent loss in October alone. The fund, managed by Hamza Lemssouguer, re-underwrote its five largest positions, which represent approximately two-thirds of its net asset value.
In the letter, the firm stated it underestimated the dislocation in CCC rated debt, which constitutes the majority of its exposure. Arini attributed recent challenges to technical factors, such as collateralized loan obligations near their limits and targeted shorting, rather than fundamental data.
The fund has trimmed some positions and reduced gross leverage to its lowest level since early 2022. It also saw $389 million in inflows over the past week as part of a $1.5 billion raise.
Arini's credit bets include Altice International, Brightspeed, and Aston Martin, which have faced financial stress and falling bond prices. The firm stated that its conviction in its core positions remains firm despite mark-to-market volatility.
A representative for the firm had no immediate comment. The fund, which started with $1 billion at its 2022 debut, grew into a $21.7 billion credit-trading firm.