Strategies
Permal managers discuss strategies
Global Macro
Macro investors are active traders who typically invest globally and seek profit from changes in global economies. Portfolios turn frequently, may use leverage and can take positions in stocks, bonds, currencies, derivatives and other financial instruments.
Global Macro Discretionary: Derive a top-down view of the world and analyze its implications on global markets using a more subjective approach, ultimately using their own discretionary judgment in implementing trades.
Global Macro Systematic (including CTAs, Managed Futures and others): Use quantitative, computer-driven models to generate buy and sell signals. Systematic strategy can be broken down into trend following and non-trend following.
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Long Only
These investments are based on traditional style fundamental, often value-oriented research.
Equity Long/Short
This discretionary strategy involves equity-oriented investing on both the long and short sides of the market across any region. Managers have the ability to shift from value to growth, from small to medium to large capitalization stocks, and from a net long position to a net short position. Managers may also use futures and options to hedge.
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Fixed Income Hedge
Fixed Income Trading involves strategies with alternative approaches to traditional fixed income investments. Managers seek to capture profit through opportunities with small pricing anomalies, while maintaining a minimum exposure to interest rates and other market risks. This strategy typically utilizes a varying amount of leverage, and investments may be either long or short.
Capital Structure Arbitrage: A form of arbitrage which exploits pricing discrepancies of securities within a company's capital structure such as senior debt versus subordinated debt.
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Natural Resources
This strategy invests in various natural resources such as energy, metals, base metals and agriculture commodities. Investments may be in a wide range of securities including commodities, futures, or underlying securities of companies engaged in any aspect of natural resources. Managers can diversify across geographic regions and employ various strategies such as long only, long short and relative value.
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Event Driven
Event driven managers identify securities that have a significant value gap between the market value and fundamental value. These Portfolio Managers attempt to identify specific catalysts that will unlock the value gap and only invest if a catalyst exists.
Merger/Risk Arbitrage: This strategy involves investments in mergers & acquisition situations such as leveraged buy-outs, mergers, friendly tender offers, and hostile takeovers. Generally, managers in this strategy invest after a particular situation has been announced and profit from the spread between the value offered for the target (cash or securities) and the price at which the stock of the target is available in the market. The manager’s research efforts will focus on the probability of the deal being completed. In the case of a merger in which a stock swap is involved, a manager simultaneously buys stock in the target and sells the stock of the acquirer.
Distressed Securities: This strategy focuses on investing in deeply discounted debt securities of companies that are experiencing financial distress that has caused the securities to trade below their intrinsic value.
Special Situations: This strategy involves investing in the equity of a company that is experiencing some form of an extraordinary corporate event such as a restructuring, a refinancing, major litigation or regulatory change.
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Relative Value Arbitrage
Relative Value Arbitrage seeks to take advantage of relative pricing discrepancies between multiple securities. This can be used in a wide range of security types including equity, fixed income or derivatives.
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Knowledge