Michael Hintze launches a credit fund that invests in credit in developed markets.
Michael Hintze, a veteran equity and bond trader and former captain in the Australian army, founded CSQ in 1999 with some USD200 million in support from Credit Suisse First Boston. Michael Hintze’s CSQ is a credit-focused multi-strategy asset fund that for consecutive years was able to deliver alpha returns, above indices return, for its investors.
“Michael Hintze’s CSQ is a credit-focused multi-strategy asset fund that for consecutive years was able to deliver alpha returns”
WEALTH TRAINING COMPANY
Its flagship Directional Opportunities Fund had averaged gains of nearly 14 percent per year since its inception in 2005
So, Michael Hintze’s CSQ, a London-based hedge fund had reliably minted money for investors more or less uninterrupted since its founding for two decades. Star hedge fund manager Michael Hintze had such a Stella run that his credit-focused fund was ranked 3 on Bloomberg’s list of the 100 top-performing large hedge funds for 2012 and No. 5 on Financial News’ FN100 Most Influential list in the hedge fund category.
Then came the black swan event, the 2020 great pandemic lockdown, and Michael Hintze’s CSQ fortunes were abruptly thrown into reverse
Michael Hintze’s CSQ flagship hedge fund was down more than 50 percent at one point in 2020, its greatest ever losses wiping out billions of assets in mere weeks.
But quoting the lyrics of a song, “What doesn’t kill you makes you stronger” the billionaire hedge fund manager is back with a vengeance as Michael Hintze launches a credit fund intending to reproduce his former track record of successful investing.
“Michael Hintze had such a Stella run that his credit-focused fund was ranked 3 on Bloomberg’s list of the 100 top-performing large hedge funds for 2012”
WEALTH TRAINING COMPANY
Michael Hintze launches a credit fund that seeks above-average returns across corporate sub-investment grade opportunities against a backdrop of increased volatility and unpredictable markets
The CQS Total Return Credit Fund targets a range of geographies, asset classes, and sectors, across various rating classes, using a bottom-up, fundamental research process.
The UCITS compliant strategy – managed by Craig Scordellis, head of multi-asset credit, and Darren Toner, head of high yield investment grade and financial portfolios – will use an unconstrained investment approach to scope out the strongest opportunities and maximize risk-adjusted returns while aiming to curb volatility and potential defaults.
“attractive, potentially higher returning alternative to traditional, predominantly investment grade-focused multi-asset credit strategies” – Michael Hintze
Michael Hintze launches a credit fund which the billionaire hedge fund manager believes has a unique advantage for investors
Michael Hintze’s CSQ fund managers reckon that the mix of fundamental research and dynamic asset allocation will provide investors with an “attractive, potentially higher returning alternative to traditional, predominantly investment grade-focused multi-asset credit strategies”. So, Michael Hintze launches a credit fund believing that it will attract capital inflows, particularly at a time when wider credit markets have a lower yielding proposition combined with heightened volatility.
Commenting on the launch, Darren Toner said credit markets offer “extremely attractive” investment opportunities.
But he stressed that a fundamental, bottom-up research approach is key to meeting investors’ return expectations while navigating a “challenging environment” of low-interest rates and increased market volatility.
Michael Hintze launches a credit fund with the view of being seen as a solution provider in the age of zero or negative real rates and negative yields
“By assessing securities individually and then allocating dynamically across the fully developed market corporate credit universe, we believe we can provide a compelling solution that meets investors’ income and capital gains requirements, whilst limiting their exposure to sources of downside risk” said Darren Toner.
As explained above, the firm built a formidable two-decade track record investing in corporate credit, structured credit, asset-backed securities, convertibles, loans, and equities.
But the unprecedented events of the past year reversed the firm’s earlier successes,
Michael Hintze launches a credit fund with the aim of putting the losses behind
The flagship fund, CQS Directional Opportunities, reportedly lost around 36 percent in 2020, while firm-wide assets took a hit during last year’s Q1 Covid-driven market turmoil.
Michael Hintze launches a credit fund as a vehicle to tap the broader investment expertise and capability of CQS’ Multi-Asset Credit Team. The Multi-Asset Credit fund has operated since 2013 and has assets under management of more than USD12 billion, as well as the wider CQS credit platform and asset allocation committee, at the time of writing this piece.
“We needed to simplify and focus our strategy. We’ve got to get back to the core — it’s credit” – Michael Hintze
Earlier this year CQS hired Bob Paterson, former head of credit sales at Lloyds Bank and a well-known veteran of the global securitization and ABS market, as a portfolio manager in its securitization group.
But as explained above, in 2020, as the coronavirus ripped through the global economies worldwide, bond markets gyrated wildly amid fears over liquidity and stock created. So, the fallout wreaked havoc in structured and complex credits, which CQS primarily invests in. So, Michael Hintze’s CSQ fund performance was hit hard, as we notice in a piece entitled, Michael Hintze clocks huge losses, dated July 2020. Michael Hintze noted in a letter to investors in November that CQS’s Directional Opportunities, which accounts for 10 percent of the firm’s assets, lost 33 percent in March and a further 17 percent in April. The firm has since cut some 50 jobs, scrapped a planned expansion into equities, and saw assets shrink by $3 billion in the short term, according to a June 2020 Bloomberg report.
“The world got turned upside down and inside out. This has allowed us to think about stuff” he says. “We needed to simplify and focus our strategy. We’ve got to get back to the core — it’s credit” said Michael Hintze.
Michael Hintze launches a credit fund which is where he believes the firm expertise lies
Despite the crushing losses in 2020 and asset under management sinking by $3 billion Michael Hintze sees the future with optimism, and no doubt his embattled investors are eager to see the billionaire hedge fund manager’s optimism translate into alpha returns in 2021
We will be keeping an eye on this one.