Monetary Matters with Jack Farley

Thinking Outside the Style Box | The Hedge Fund Category Problem with Louis Camhi | Other People's Money with Max Wiethe

Nov 12, 2024

Louis Camhi, Founder and CIO of RLH Capital, shares his expertise navigating the tricky world of SPACs. He discusses the challenges of fitting unique investment strategies into traditional hedge fund categories. Camhi emphasizes the need for clear communication with investors to build trust. The conversation dives into the difficulties of fundraising and operational complexities in hedge funds. He also highlights the importance of adaptability in investment strategies as market conditions evolve, ensuring that funds stay relevant and competitive.

56:05

Episode guests

Louis Camhi

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Episode notes

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Quick takeaways

Louis Camhi discusses the challenges of defining his SPAC-focused fund within traditional hedge fund style boxes, impacting investor engagement and strategy communication.

The podcast emphasizes the strategic importance of understanding the distinct phases of SPAC investments, particularly the overlooked pre-merger phase for yielding returns.

Camhi highlights the operational challenges of fund management, advocating for outsourcing back-office tasks to allow a greater focus on investment strategies.

Deep dives

Understanding SPACs and Market Opportunities

SPACs, or Special Purpose Acquisition Companies, have gained significant attention in the finance world, especially during market fluctuations. The podcast delves into the nuances of SPAC trading, emphasizing the distinction between investing in a SPAC's pre-merger phase and its post-merger status. It notes that many investors incorrectly view SPACs only through the lens of their performance following a merger, overlooking the potential for fixed-income-like returns during the acquisition phase. The discussion highlights a strategic approach that balances lower-risk treasury-like investments with more aggressive equity holdings to navigate the evolving SPAC market.

Intro

2min

Navigating the SPAC Investment Landscape

20min

Understanding Limited Partners in Hedge Fund Investments

2min

Navigating SPAC Strategies in Investment Portfolios

4min

Navigating Fundraising in Hedge Funds

7min

Navigating Capital Raising and Operational Structures in Hedge Funds

5min

Navigating Hedge Fund Financial Challenges

4min

Adapting SPAC Investment Strategies

12min

Hedge fund strategies like distressed, long short equities, relative value, etc. are well defined and understood by allocators. As a result, funds that fit neatly into these style boxes can easily answer the question, “what type of fund are you?” But what if you don’t fit neatly into one of these boxes? Be too exact and no one will search for your niche strategy. Push the envelope to fit into one of these boxes and suddenly investors feel like they’ve been tricked into a meeting. This is a problem that Louis Camhi, founder and CIO of RLH Capital, has had to deal with since launching his SPAC focused strategy in 2021. In this interview with Max Wiethe, Camhi discusses why educating investors about SPACs and defining his fund for style box focused investors has been harder than finding interesting SPAC trades. They also touch on outsourcing back and middle office, the little things you don’t think about when you are working for a larger fund, and the tradeoffs between SMAs and pooled vehicles.

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