Laffitte Capital Management is an asset management company specialised in regulated and liquid alternative funds. Lenfant David provided us with a unique insight into the firm and the various services it provides.
Laffitte Capital Management was founded by four ex-proprietary traders, all of whom have a strong experience in financial markets. They worked together for more than 15 years in a major French banking group.
They created and developed the proprietary trading desk investing in the following arbitrage strategies: merger arbitrage, dividend arbitrage and index arbitrage in Europe and in the United States.
In 2007, the team decided to offer their expertise to clients and to open their own alternative funds in regulated vehicles. Therefore in that year they developed Laffitte Risk Arbitrage Ucits which is focused on announced merger arbitrage in Europe and North America.
The fund posted a strong performance of 6.60% in 2015 (with historical volatility below 3%).
The number and volume of announced deals exceeded 2007 record levels. Usually we have 40 to 70 deals we can invest in after applying our liquidity filters, however in 2015 we never had less than 90. Nevertheless the merger arbitrage strategy witnessed strong performance dispersion between funds.
We were very selective in the investments we made. We had almost no deals with wide spreads which were not rewarding the risks enough. And we had as well almost no premerger situations (limited by design at 10% maximum) which embed a larger beta to the equity market than pure merger arbitrage investment. Indeed, we had more than enough deals of great quality to invest in.
Then portfolio was very well diversified which decreased at the fund level any negative impact of a single bad trade.
Ultimately our investment process which is based on our unique database permitted to take advantage of the increased levels of volatility and to trade a lot around the fair value of the merger spreads.
In order to capitalise on the success of our approach a second Ucits fund, Laffitte Index Arbitrage, was launched in 2012 and is a market neutral multi-arbitrage.
These investment vehicles have an absolute performance objective, are liquid, have little correlation to the equity and bond markets and have a low historical volatility (below 3%).
Looking to the future we are confident that our funds are resilient and nimble enough to produce some robust alpha for our investors in these troubled market environments. The best might be yet to come.
Moreover, since we launched Laffitte Capital many of our clients have noticed that the quality of service and advice in the wealth management business was sometimes very poor.
As arbitrageurs, as we witness a long-lasting mismatch in the costs/ services offered in this business and as such we are planning to launch very soon an entity focused on wealth management, using talented and dedicated partners to ensure that our clients receive only the best service. Currently we always endeavour to be as transparent as possible with our investors so have a good understanding of their investments.
This involves providing them with detailed reporting and making ourselves available at any time to discuss our positions, and we will be using this approach in our new venture to support our new clients.
We are proud to have been awarded ‘Best for Ucits Fund Arbitrage – Laffitte Risk Arbitrage Ucits’ as it is the recognition of our continuous hard work and commitment to better serve our investors, and in the future hope to continue and improve upon this success.
Company: Laffitte Capital Management
Name: Lenfant David
Email: [email protected]
Web Address: www.laffittecapital.com
Telephone: 33 1 55 04 79 30
