Notwithstanding reports that convertible arbitrage will rise again, a North Carolina hedge fund, hit hard by the pummeled strategy, is not sticking around for the revival. Akela Capital is one of only a dozen or so hedge fund managers in the Tar Heel State, and unfortunately for them, many specialized in convertible arb, the downturn of which has forced the Cary, N.C.-based firm to close its doors. Founded five years ago by Anthony Bosco, a former trader at Morgan Stanley, Akela once boasts $600 million AUM, but, while no figures were available on what’s left, The Triangle Business Journal says convertible arb firms in the state like Akela lost between 30% and 70% of their assets last year. “I don’t know why, but a lot of people who came here seven or eight years ago to set up hedge funds were into convertible arbitrage,” Charles Leedy, a founder of Chapel Hill Investment Advisors told the Journal. Unlike Akela, the other mainstays of the area, Argent Financial Group and Silverback Asset Management, are sticking with the strategy. Argent started 2005 with $3 billion AUM – now reportedly at about $1.3 billion – and according to its managing director, Nate Brown, after a bad first half last year and a nice recovery in the second half, “we’re back to even now.” For its part, Silverback has gone on to other strategies, one of which, according to Experian Business Reports, now bets on personal-injury and life litigation settlements.
