Yesterday, we announced the results of our fourth annual Reuters HedgeWorld & Dykema Insolvency Outlook Survey, which provides an inside look at the distressed investing landscape through the eyes of 100 hedge fund managers.
Highlighting a growing appetite for risk, our survey indicates that hedge funds are planning to hold their debt positions in financially troubled companies in search of enhanced returns. Please visit the Reuters story here for more details on the implications of our survey findings, and watch Richard Bendix discuss the results in more depth with Reuters Insider here.
In addition to what has been reported in the media, we wanted to take this opportunity to share a complimentary copy of our 16-page survey report which is available here.
Highlights of the Reuters HedgeWorld & Dykema 2011 Insolvency Outlook Survey include:
- 72 percent of hedge fund managers report having a portion of their portfolios invested in financially troubled companies, up from 65 percent in 2010.
- Financially troubled companies continue to generate positive returns for the majority of hedge funds: 62 percent of respondents who invested in financially troubled companies have seen these positions increase in value.
- Loan to own strategies bounced back: 29 percent of respondents report loaning money to a financially troubled company in pursuit of a loan to own strategy, up from 17 percent the previous year, and 50 percent of these hedge funds successfully acquired an ownership stake.
- 1 in 3 hedge funds report that they are likely to invest in municipal debt in the next year.
- The majority of hedge fund managers (58 percent) believe that the Dodd-Frank Act will be ineffective in making the marketplace more transparent.
We welcome any feedback on the report and hope you find it helpful in assessing the challenges and opportunities in today's marketplace.