WEST PALM BEACH, FL (www.hedgeco.net) – A Hedge fund adviser commented that pricing anomalies in Japan’s troubled companies may offer hedge fund managers increased opportunities to reap profits.Growth in the Japanese hedge fund sector has been notching upwards in recent times. Difficulties facing some Japanese firms may ultimately create arbitrage opportunities for hedge fund managersapplying such strategies. The Japanese markets have seen growing popularity of hedge funds as more qualified investors demand such products.<\/p>\n
Last year alone, institutional investors in Japan invested nearly $35 billion of investment assets into the markets, according to a report by Daiwa Securities. So far hedge funds have not taken advantage of such price anomalies, according to Ottoman’s managing principal and founder James Fiorillo, a former analyst at ING Barings. Ottoman Capital, a Japanese-based firm, is an adviser to Cayman-Islands domiciled hedge fund manager, Japan Natural Selection Fund. Ottoman said, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdOut of the 1,690 firms listed on the first section of the Tokyo Stock Exchange, 600 are troubled.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd<\/p>\n
Fiorillo said his company is different because they focus on listed troubled companies. Explaining further that these troubled firms are, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdFor example, lumbered with too many debts, losing market share or suffering years of losses.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Fiorillo said, such companies should be analyzed for short-selling opportunities by hedge funds.<\/p>\n
According to published reports, the Japan Natural Selection Fund, was launched recently with $1 million in seed capital. The asset manager plans to close the fund when assets reach the $300 million level. In five days of trading, the fund has realized 0.26 percent gains when the Japanese declined by 0.26 percent. Fiorillo says his fund likes out of favor stocks, and will continue to apply short-selling techniques to take advantage of such opportunities.<\/p>\n
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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