George Weiss Associates, an equity-based hedge fund in New York, plans to start trading credit derivatives as part of a high-yield effort. The hedge fund has brought on board two high-yield pros fromSteinberg Priest & Sloan Capital Management, a fund manager that recently closed its high-yield operation. Orest Stelmach, high-yield portfolio manager, and Andrew Okun, senior analyst, started in recent weeks at George Weiss in similar capacities.
Stelmach said, "We are going to be investing in the long side in free cash flow-generating companies and hedging that with short sales of companies that either have flawed business plans or are not generating free cash flow." The strategy does not have a target mix for long and short positions. He said the strategy should work because "the high-yield market is so inefficient. Investors chase yield and often the good goes down with the bad and the bad goes up with the good."
Michael Steinberg, managing partner at Steinberg Priest & Sloan, did not return calls by press time.
