(Bloomberg) -- Losses at Arini Capital Management’s main hedge fund deepened in the final days of October, taking declines to 32% for the year, according to a letter to investors seen by Bloomberg.
The high-yield debt specialist suffered a 19.7% loss in October alone as credit markets remained persistently weak, the letter said. Against that backdrop, the master fund run by Hamza Lemssouguer re-underwrote each of its five largest positions, representing about two-thirds of its net asset value. It also saw $389 million of inflows over the past week, part of its $1.5 billion raise.
The fund “underestimated” the dislocation in CCC rated debt, which makes up the majority of the fund’s exposure, leading to a highly correlated portfolio, the letter said. It trimmed some positions and cut gross leverage to the lowest level since early 2022, while planning to build in more diversification.
“As for our core positions, let us be clear: Our conviction remains firm,” Arini’s letter said. “Mark-to-market volatility of this kind is inherent in a concentrated, contrarian mandate. The fund has the structural duration of capital to see these investments through to their catalysts.”
A representative for the London-based firm had no immediate comment.