Osprey Group Asset Management is planning to launch a distressed fund sometime in the next month. Run by Michael Araiz and Mathew Bennett, who have worked together for 15 years at Imperial Capital, Ladenburg Thalmann and M.J. Whitman, the fund will make value investment plays across the capital structure including equity, bonds and bank debt.
The fund will kick off with just $25 million, but will have the advantage of being small without the burdens of having to put a lot of capital to work in the distressed area, said Araiz. He added that there should also be good opportunities to pick up some fallen angels. Earlier this year the firm tapped Steve Jackson, formerly of SAC Capital Advisors, to manage the fund. Jackson, who was most recently day trading, noted the fund will also make capital structure arbitrage investments. Possible plays include both intra-company and paired trades.
The firm is also working on a levered version of its flagship Osprey Opportunity Fund. The fund buys at a discount mostly high-grade asset-backed securities in odd-lot portions from dealers looking to shed these positions. It then generates alpha by selling the odd-lots to smaller dealers or by collecting enough odd-lots to create round-lots for sale in that market. The new version, which will apply leverage externally, will afford investors the opportunity to get higher returns off the low volatility strategy, said Araiz. Osprey has lined up about $200 million for the new offering and is awaiting bank approval.