NEW YORK–Having managed a hedged distressed securities portfolio for years, Mellon HBV Alternative Strategies LLC added a U.S.-focused long-only distressed strategy that involves acquiring influential or controlling positions in troubled public companies.
James Jenkins and George Konomos lead the eight-member investment team for this new discipline. They will target bank debt or bonds trading at significant discounts and seek to participate actively in the restructuring process of these companies. Mickey Harley, Mellon HBV president and chief executive officer, will oversee the group.
“This new discipline complements our distressed investment expertise and is appropriate to the current market cycle,” said Mellon HBV Managing Director Jonathan Bean, in a statement.
Record defaults and distressed debt have fueled returns in this field and investor interest has been strong in the past year. While the default rate has now fallen, outstanding distressed debt is estimated variously as being between US$750 billion and US$1 trillion, still massive by historical standards Previous HedgeWorld Story.
“We are seeing growing opportunities in this area as the overall size of the distressed debt market has tripled in the last three years,” said Ronald O’Hanley, Mellon vice chairman and president of its institutional asset management group.
New York-based Mellon HBV has more than US$750 million in assets under management in four event-driven styles: arbitrage (U.S. risk arbitrage, European risk arbitrage, global risk arbitrage); distressed; special situations (U.S. special situations, European event-driven); and multi-strategy investing.
Its corporate parent, Pittsburgh-headquartered Mellon Financial Corp., has approximately US$3.1 trillion in assets under management, administration or custody, of which $612 billion is under management.