Newly launched hedge fund manager Pisces Capital Management will likely enter over-the-counter derivatives to hedge positions in its Pisces Capital fund, which adopts special situations and value-driven strategies. Josh Fischer, managing principal in New York, said the firm will evaluate buying and selling equity derivatives, including puts and calls, as well as entering interest rate and credit derivatives for hedging. OTC trades will also be evaluated as investments.
Pisces Capital enters arbitrage trades, such as capital structure arbitrage and pair trades, when it believes a security is mispriced. The trades are normally in response to some form of catalyst, such as a merger, bankruptcy or refinancing, Fischer explained. Morgan Stanley is prime broker for the fund but Pisces would shop around for derivatives counterparties according to criteria including price, he said.
