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Endeavour Capital - relative-value

2008-05-09

Count of distinct funds: 1
Capital base: $2.88B
Loss: 28% (in March, 2008)

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stories: bloomberg.com, bloomberg.com

Imploded, 2008-05-09:

This entry is being upgraded (downgraded?) to an implode, as per this Bloomberg article:

Paul Matthews, head of Endeavour Capital LLP in London, told investors last month he would liquidate what had been a $2.9 billion hedge fund after losing money on Japanese government debt. The fund lost about a third of its value in March when the spread on yields between 7-year and 20-year Japanese government bonds ballooned to their widest in nine years.

Original Writeup, 2008-03-19:

Reliable Bloomberg has the story:

Endeavour Capital LLP, the London- based hedge-fund firm founded by former Salomon Smith Barney Inc. traders, has fallen about 28 percent this month because of ``extreme volatility and vast moves'' in Japanese bonds, according to two investors.

The $2.88 billion Endeavour Fund sold ``substantially all'' of its Japanese government debt this week, Chief Executive Officer Paul Matthews said today in an interview. He declined to comment on the March decline.

On the fund's strategy:

Endeavour seeks to profit from discrepancies in the prices of various fixed-income securities and currencies, a strategy known as relative-value trading.

As far as recovery strategies, this gives us pause:

They told investors the fund may borrow as much as $20 for each $1 in capital to boost returns and may experience wide swings in value, according to marketing documents obtained by Bloomberg News. The documents said managers would seek to limit risk so no one position would result in a loss of more than 20 percent.

Doubling down on more leverage amidst global market turmoil not seen in a generation? This should be interesting.

Endeavor says redemption requests have not occurred. The fund gained 11% last year. It was leading other funds in its class until this month, according to Bloomberg.

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.