Epsilon Investment Management is using the recent sell-off in the collateralized debt obligation market as an opportunity to raise capital for the firm. A recent letter sent to clients on behalf of Steve Stevanovich, principal, urges them to invest additional capital in Epsilon Global Value Fund III, as he and senior members of the Boac Raton, Fla.-based firm have already done.
The May 26 letter says the recent sell-off in CDO equity tranches caused by the downgrade of General Motors' credit created a buying opportunity. "The massive and unprecedented technical sell off in the CDO market over the last few weeks has created exceptional opportunities for absolute returns," the letter says.
Calls to Stevanovich were returned by Frits Lieuw-kie-song, Epsilon spokesman. "Our analysis is turning out to be very accurate--CDO equity tranche prices have gone up by 19.4% since we wrote our letter," he said in an email, declining further comment.