Not many people would want to leave a steady job to start a new business during a global pandemic. For former Fir Tree partner Aaron Stern, that kind of counterintuitive thinking is par for the course.
Stern, who ran distressed, special situations, and event-driven investments at Fir Tree before launching Converium Capital Management last year, says he’s been a contrarian since his father introduced him to investing and let Stern manage the family’s college savings when Stern was still in his teens.
“I’m a contrarian and problem solver by nature,” said Stern, in his first interview about Converium, a multistrategy and opportunistic manager based in Montreal. “I’m drawn to companies and situations that are going through changes. When something bad happens, the folks who are closest to the situation, the experts, tend to be the most negatively impacted and don’t want to touch it.”
That creates a vacuum that investors like Stern can fill, and it’s a perspective that shapes the new firm’s investment philosophy, he said.
Converium has the flexibility to make event-driven investments around the globe, depending on where the team sees opportunities at any particular time. Investments could include, among others, activist situations, distressed debt, and sovereign debt.
Stern said he’s talked to investors over the past six months about possible opportunities in distressed corporates, some emerging markets, smaller investments in energy, distressed municipals in the U.S., and equities in Japan.
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“A lot of positions are off the beaten path,” said Stern. “That’s because everyone is feeling good after all the government stimulus. But once Covid is over, companies will move from pro forma numbers to actual numbers.”
In other words, he explained, investors are giving public companies the benefit of the doubt in terms of getting back to normal. The situation in emerging markets is even more uncertain, “as their central banks aren’t able to print endless amounts of money.”
Stern has attracted a number of former colleagues. Michael Rapps, a lifelong friend of Stern’s and a workout specialist in Canada who is also the former CEO of publicly traded Clarke, joined Converium to head activist and restructuring. As a former CEO, Rapps will help the firm gain credibility with corporates, said Stern.
Fir Tree’s Elliot Ruda joined Converium to head trading. Other executives who joined the new venture include Darren Martian, CFO, who was previously COO and CFO at Dracaena Capital and CFO of Duquesne Capital Management, and Jason Crelinsten, the former general counsel at Greylock Capital Management. The latest hire is Mathieu Fradette, a veteran of PSP Investments and CPPIB, who joined as director and investment team member.
“I’ve been fortunate to bring on nine people so far without a recruiting firm or LinkedIn,” said Stern. “Covid, I believe, has made more folks open to change. We’ve all known people who have been impacted and realize life is short and you should do what you're passionate about.”