NEW YORK (HedgeWorld.com)–Lyster Watson & Company, an investment adviser that oversees more than US$1 billion in assets, added to its offerings an event-driven distressed discipline run by Mellon HBV Alternative Strategies LLC.

The strategy is trading oriented and targets opportunities in the current distressed securities investment cycle. Its main focus is on taking long positions in companies that are in financial difficulty or in cyclical downturns.

“Our research leads us to believe that there is exceptional value in the record level of paper moving through the bankruptcy and restructuring process,” said Bob Lyster of New York-based Lyster Watson, in a statement. “We have worked with the Mellon HBV distressed team for more than two years and look forward to working with them on this new strategy.”

Lyster Watson advises on assets allocated to single-manager hedge funds as well as funds of funds and customized multi-manager portfolios for institutions. It has been active in the distressed arena since its formation in 1992. In 2001, it launched Lyster Watson Distressed Opportunity, a fund of funds designed for diversified exposure to this asset class .

Unprecedented Supply

Mr. Lyster said that the new offering, based on the long-only portion of the Mellon HBV hedged distressed approach, is particularly well suited to capitalize on current opportunities.

A team of 11 professionals led by Mellon HBV President and Chief Executive Mickey Harley will be responsible for the new portfolio. George Konomos is the portfolio manager, Tony Guido is director of trading, Greg Schrock is director of research, and Bill O’Donnell and Jim Jenkins are senior analysts.

Mr. Jenkins also serves as co-portfolio manager for Mellon HBV’s control-oriented (rather than trading-oriented) distressed fund, which was launched in July and is currently in operation Previous HedgeWorld Story.

“The distressed market continues to be characterized by an unprecedented oversupply of distressed paper in relation to the amount of capital dedicated to distressed investing,” stated Mellon HBV Managing Director Jonathan Bean.

Mellon HBV has combined assets under management in excess of US$900 million in four event-driven strategies: U.S. and global risk arbitrage; various distressed securities styles; special situations/event-driven (U.S. and European); and multi-strategy. The New York-headquartered firm is a subsidiary of Mellon Financial Corp., which is responsible for US$3.1 trillion in assets, including US$612 billion under management.

CKurdas@HedgeWorld.com