The Driehaus liquid 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 latest bout of macroeconomic volatility is driving an increase in corporate actions and a broadening event driven opportunity set. In this letter the managers discuss the tools they utilize to capitalize on these opportunities across the fund's three core strategies: Risk Arbitrage, Catalyst Driven Credit, and Catalyst Driven Equity.
This quarter we are inverting the case study theme by discussing examples of two prospective merger arbitrage investments wherein we applied our investing framework and decided NOT to invest initially, but ultimately invested once the risk-adjusted return opportunity became more compelling. These inverted cases exemplify how our investment process prioritizes preservation of capital first and foremost and illustrate how the broad scope and opportunistic nature of our approach to event driven investing provides more tools with which to generate alpha, as compared to funds limited to a single event type or asset class.