BOSTON, May 6 (Reuters) - Hedge fund manager Steven Persky plans to start betting on companies’ bad fortunes again.
Persky, who runs $1 billion hedge fund firm Dalton Investments, said on Wednesday he will re-launch his distressed debt strategy three years after liquidating two similar portfolios when the strong economy made such investing difficult.
Now that times have changed dramatically, Persky is among a handful of fund managers who expect to make money for their wealthy clients in the distressed area.
“We believe this is an opportune time to re-enter the distressed-debt market,” Persky said, explaining that many companies that were taken private a few years ago were now “trapped in ‘good deals’ that have gone bad.”
Persky began managing distressed assets in 1999.
Three years ago, the Los Angeles-based fund firm said it would return about $300 million to those who invested in its Dalton Global Opportunity Fund and Dalton Distressed Debt Fund.
In 2006, strong economic growth along with access to relatively cheap capital, allowed many companies to try to shore up balance sheets, which made it more difficult for investors to find lucrative distressed debt bets.
That all changed late last year when the global financial crisis deepened and the excesses of easy credit helped create a broad range of distressed-debt opportunities, Persky said.
Persky, who co-founded Dalton with James Rosenwald in 1998, will manage the new fund along with Swaraj Chowdhury. (Reporting by Svea Herbst-Bayliss; Editing bu Ted Kerr)