BlackHawk Capital Management will start selling credit default swaps for its USD40.7 million investment-grade corporate bond long/short fund. Doug Penick, managing director at the Iowa City-based firm, said it expects to start trading default swaps in the first quarter.
Penick said it is looking at credit-default swaps now because it has built up its assets under management. One of the major considerations that banks use to asses counterparty risk is assets, and with USD40 million, some houses are now willing to work with BlackHawk, said Penick.
Earlier this year, BlackHawk experienced a major problem with its fund and suffered losses of roughly 14%. The firm liquidated the fund in April and eventually began trading again with new risk parameters. The fund had USD24 million at the time it was liquidated and investors were given the option to pull their assets despite any lockup constraints. One month later, the fund had only USD8 million due to these redemptions, said Penick. For the year the fund is up approximately 5%, he said.
