In retrospect we may have been too harsh more than a decade ago when we declared the end of Boaz Weinstein’s investing career back in 2009 in “The Rapid Rise and Blistering Fall Of Boaz Weinstein” following his huge losses incurred at Deutsche Bank (where he worked at the time) during the financial crisis. The reason is that unlike so many of his peers, Boaz actually learned from that particular experience and carried over the lessons to has Saba Capital which has while having its share of impressive returns and staggering drops over the past few years, has emerged as a clear winner during the current Global Coronavirus Crisis.
Unlike much of the hedge fund industry which has failed miserably to navigate their way through the worst turbulence since the global financial crisis, resulting in memorable quotes such as this one, “It feels like strapping on a flak jacket and jumping on hand grenades going off every day,” as one hedge fund manager told the FT, Boaz Weinstein’s main hedge fund gained a whopping 82% in the first quarter.
Weinstein’s Saba Capital Management, which earlier this month had $2.2 billion of assets, extended its climb from earlier in the year as the derivative and basis trade guru showed how hedge funds are supposed to work during market turmoil, as his bets on credit default swaps and derivative trades on companies in the retail and energy sectors generates massive profits in March, following a similar performance in February.
According to Bloomberg, the 82% gain was achieved by March 20, although the subsequent mini bull market in a bigger bear market may have sapped some of his YTD returns.
Saba’s stellar returns come as the coronavirus pandemic has shuttered global economies, with investors now expecting a brief but staggering recession in coming months, sending stocks plummeting and even some of the safest assets like U.S. Treasuries seeing liquidity evaporate.
Enter Weinstein, the former co-head of credit at Deutsche Bank, who has traditionally outperformed when volatility is high, and – like Bill Ackman and a handful of others – appears to have taken advantage of record low CDS spread at the start of the year.
It was unclear if, like Ackman, Weinstein closed out his short trades or if he remains bearish on risk.