(Bloomberg) -- Former Credit Suisse star trader Hamza Lemssouguer’s hedge fund Arini achieved another double-digit annual return, helping to boost assets at the three-year-old firm to almost $7 billion.
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The Arini Credit Master Fund gained 21.2%, according to an investor letter seen by Bloomberg. A co-investment money pool returned 13.8%, while the Arini Structured Credit Equity Fund made 4.3%, the letter showed. Credit hedge funds tracked by Bloomberg rose 8.5% on average.
Gains across Arini’s funds last year were driven by the high-yield and leveraged loan markets through both long and short bets, refinancings and liability management transactions, par and deeply discounted bonds, among others.
In recent months, the fund has found opportunities in telecoms, travel and leisure, and specialty financials, while its shorts remain focused on autos, chemicals, broadcasting and satellites.
In his 11-page annual letter to clients, Lemssouguer called tighter spreads in credit markets “irrational” with the maturity wall in European leveraged finance presenting a fertile hunting ground for his London-based firm to make money. Arini, which launched in 2022 with $1 billion, raised a further $1.2 billion last year and Lemssouguer said he plans to expand product offerings.
“We don’t view current spreads as reflective of the risk associated with the underlying credit quality,” Lemssouguer wrote. “Generic credit markets are exposed to disorderly rates market selloffs and budget deficit confidence scares, and these risks have our attention across all regions and jurisdictions.”
After a dismal few years, Europe’s leveraged finance market rebounded strongly in 2024, as falling inflation and the start of the interest rate cutting cycle lured corporate borrowers back. Issuance boomed in both the high-yield bond and leveraged loan markets. Both delivered strong returns — of 8.2% and 9.2% respectively — according to data compiled by Bloomberg.
While many hedge fund clients are migrating to bigger multistrategy firms in hope of steadier returns, outfits run by individuals such as Lemssouguer’s Arini and John Aylward’s Sona Asset Management have tapped into demand for specialist credit managers to become the fastest-growing hedge funds in London.