Highbridge Multi-Strategy: Set to Exploit Market Volatility and Dislocations

Highbridge Multi-Strategy Fund - Set to exploit market volatility and dislocations


Fidante Capital's latest report takes a closer look at Highbridge Multi-Strategy throughout 2018 


• 2018 has been a difficult year for hedge funds and by some measures the asset class had its worst performance since the Global Financial Crisis (GFC). While Highbridge Multi-Strategy Fund (HMSF; the Company)* was not able to avoid a negative return in 2018 (its first losing year since launching in 2006, with a NAV return of -2.0%), its NAV performance was significantly better than that of the average hedge fund and, of course, stock markets. This outperformance supports the Company’s assessment, that it has a competitive advantage in an environment of high market volatility, and that HMSF can provide stability to a portfolio of other investments, if included, during periods of turbulence.

• The manager Highbridge Capital Management (HCM) has made changes to the make-up of the Master Fund portfolio through 2018 with the aim of helping ensure that it can benefit from the new market conditions, notably the elevated market volatility, which they believe is here to stay. This positioning has contributed to the very good start in January 2019 (HMSF has returned 1.7% up to 25 January 2019), with positive performance derived from a range of high conviction sub-strategies. We believe that this breadth of return generators bodes well for the prospects in 2019.

• During the first eleven months of 2018, the Company’s shares traded at a small premium of 0.2% on average, the best rating amongst the established single manager listed hedge funds, but in December 2018 the shares started to decline sharply, taking the discount to around 3.8% by the end of 2018. Since then, the shares have stabilised at around the 4.0% discount level. We believe this sell-off was, at least in part, due to the overall increase in risk aversion in capital markets in the last three months of 2018. This may prove to be an attractive entry level, especially if the NAV recovers further from this point.


* Current corporate client of Fidante Capital.


For the full report click here.


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