The Driehaus alternatives team manages the Driehaus Event Driven strategy. The Event Driven strategy employs an array of trade strategies that seek to deliver superior risk adjusted returns, while exhibiting low correlation and less volatility relative to major asset classes/event driven indices. The strategy is led by portfolio managers Michael Caldwell, Thomas McCauley and Yoav Sharon.
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The strategy seeks to provide superior risk adjusted returns with low correlations to major asset classes and lower volatility than the S&P 500 Index.
We believe attractive event-driven investments exist in the global equity and credit markets due to the highly idiosyncratic nature of event-driven situations. Traditional market participants are often unwilling or unable to navigate the capital structure, legal, and regulatory complexity of event driven situations and/or may have discomfort with binary outcomes. The strategy seeks to exploit these market inefficiencies by applying a highly specialized event driven investing framework which enables us to identify the most attractive risk adjusted return opportunity for a given situation.
The markets of 2022 were dominated by macroeconomic debates, many of which persist today. Regardless of the market environment, the objective of Event Driven Strategy remains the same: identify and invest in catalyst driven situations that offer compelling risk-adjusted returns and a high probability of success. Herein, we provide a year-end recap of the markets and discuss the opportunity set and recent new investments across our three primary investment strategies: Arbitrage, Catalyst Driven Credit, and Catalyst Driven Equity.
Imagine placing a bet on a sporting event for which one casino offers winning payout odds of 3-to-1 and a different casino offers odds of 6-to-1…for the same bet. Who wouldn’t choose the latter? Using multiple securities — as opposed to using strictly equity — to invest in merger arbitrage presents a similar opportunity to increase the odds of a successful investment. The Driehaus Event Driven Strategy’s investments in Twitter illustrate this compelling value proposition of using multiple securities to invest in merger arbitrage.