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Derivatives

U.S. Equity Hedge Fund Evaluates Options

New York-based hedge fund manager AM Investment Partners will evaluate entering over-the-counter equity derivatives for its newly launched AM Investment T Fund, a long/short equity fund.

New York-based hedge fund manager AM Investment Partners will evaluate entering over-the-counter equity derivatives for its newly launched AM Investment T Fund, a long/short equity fund. Mark Friedman, partner, said the fund will consider buying both puts and calls to execute the most efficient trade. For example, if the fund wants to go long a stock it may either purchase the equity or buy calls to gain a similar exposure. To take a short view the fund will consider buying puts as an alternative to shorting the stock. It may also buy puts as a means of hedging the fund's long portfolio. Friedman declined to reveal the size of assets under management.

The fund will mostly rely on listed derivatives and will only enter over-the-counter contracts if they have more favorable pricing, Friedman said. Bear Stearns is prime broker, but AM will shop between counterparties for over-the-counter trades.

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