Former ADM executive launches hedge fund

A new beginning for Justin Ferrier who partners with Geoff Lee and Alfred Mui to form a special situations, distressed and high-yield debt hedge fund.
New Hong Kong-based hedge fund manager Myo Capital is launching the Myo Capital Master Fund. Its strategy will tackle undervalued credit situations in Asia ex-Japan.

Myo has four separate sub-strategies: high-yield credit, distressed, special situations and event driven from a credit angle. This fund is taking a trading mentality to these operations instead of the usual longer-term approach to such strategies.

The fund will launch in April with assets of approximately $50 million to $100 million. It plans to soft-close at $200 million, with the current team of 12 having capacity of $500 million.

Justin Ferrier, who was a former director and member of the investment committee at special/situations/distressed manager ADM Capital, is the CEO and CIO. He also has day-to-day management responsibility for the distressed strategy.

Geoff Lee will handle the special situations portion. He worked with Ferrier at Peregrine Capital, before working later at HSBC Alternative Proprietary Investments and CLSA Capital PartnersÆ Mezzanine Fund.

Alfred Mui, who had previously been a director at UBSÆs Global Credit Strategy Group, will be primarily responsible for high-yield business. However, there will be a lot of overlap between the three of them.

Myo says it is one of the few Asian funds investing across the entire credit spectrum, with specialists in credit trading, special situations and distressed.

ôFor example, if we are looking at a distressed credit," says Ferrier, "our Thai or Indonesian analyst will provide local intelligence, while Alfred, our trader, provides the market pricing and can source the credit from a large number of participants.ö

Target returns are 13%-15% net, on volatility of 7% and a Sharpe Ratio of 1.5-2. The fund wants to get equity style returns via investing in credit instruments like loans, bonds and receivables, on the rationale that this part of the capital structure can offer more downside protection. The fund may be leveraged 150%, but will not use leverage at first.

On the risk side, Myo will take a credit delta neutral approach and seek to be fully hedged against long positions. When they invest in an issuer where there is no obvious direct hedge, they will create a synthetic hedge, say using credit default swaps against macro scenarios via a sovereign bond and perhaps coupled with a short currency position.

Service providers are Merrill Lynch as prime broker, Maples and Calder and Simmons & Simmons as lawyers and HSBC as administrator.

Myo, in the context of this fund, was selected as a name because it is a medical prefix denoting a relationship to muscle (Justin Ferrier used to be a physiotherapist). Myo is also a green, one-eyed beast with regenerating powers who appeared in Star Wars, and is described online by Wikipedia as "fearless".
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