The Derivative The Kaoboy of Convertible Arb with Michael Kao
Saddle up everybody, because we’ve got the UrbanKaoboy on this episode, who’s ridden everything from ponies to draft horses to mustangs over his 30+ years in the investment game, doing commodities and derivatives at Goldman in the 90s, risk arb at Canyon Partners, and then opportunistic/value at his own fund Akanthos Cap Mgmt, before hanging up his spurs and focusing on running his own family office. We’re talking with Michael Kao about the credit culture in LA investment firms, trading the Goldman roll in commodities, how corporate debt = short puts and equity = long calls, the trading pits, finding long gamma in a short gamma arb strategy, convertible bonds, arb trade structures, Star Wars, pricing synthetic options, credit spreads blowing out, needing good marginability, Michael Saylor's diamond hands, the potential train wreck that is MSTR's balance sheet, and more. This was a fascinating look into the mind of an opportunistic investor.
Chapters:
00:00-02:24=Intro
02:25-13:41=Drexel, LA, and the Goldman Commodity Roll
13:42-36:50=Canyon, Akanthos, and Convertible Arb
36:51-55:45=MSTR, Saylor, and the Capital Structure
55:46-01:01:19=Tokenized Residential Real Estate
01:01:20-01:08:02=Star Wars Fanboy
Follow along with Michael Kao on twitter @UrbanKaoboy
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