FMA Students Learned About Arbitrage-Based Hedge Funds Today from Chris McGuire of Phalanx Capital Management
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| Dr. David Krause, Chris McGuire and Dan Farrell |
Phalanx Capital, a Chicago-based Asian Volatility
Multi-Strategy Hedge Fund, was founded in 2004 by Chris McGuire (a 1991
Marquette University alumnus).
The fund has received numerous awards over the years and is
considered to be one of the more creative (and non-correlated) hedge funds in
existence.
Phalanx investors have received positive year-over-year
returns in 10 out of 11 years since the fund was founded.
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| Chris McGuire talked with FMA students |
Chris McGuire told the FMA students that Phalanx pioneered the
enhancement of traditional Convertible Bond Arbitrage with Volatility and
Credit strategies. He did an excellent job explaining how Phalanx gains its
exposure through the buying of cheap or mispriced options in Japan and Asia. He
noted that they deliver “alpha” through 3 main strategies: convertible bond
arbitrage, volatility arbitrage, and equity opportunistic strategies.
Chris talked about his various experiences since graduating
from Marquette – including time spent in London and Tokyo. He explained why
their investment focus is on Japan and how they are able to exploit unique
structural inefficiencies that do not exist in the rest of the world. The
students were interested to learn about the firm’s use of asset swaps,
convertible bonds and options.
Dr. David Krause, AIM program director stated, “It was great
to have Chris and Dan address the students. Also we really appreciated them
taking the time to meet with small groups of students for an hour after their
presentation. With Chris having two decades of experience in trading
international options and convertibles, it is clear that Phalanx provides the
experience and analytical skills to identify pricing anomalies in the convertible
bond and volatility markets. It was very interesting and we’re thankful they
visited us for an afternoon.”
