GLG's co-CEO says opportunities in convertibles, distressed will be more difficult in the future

By Jennifer Lanning Drey

Portland, Ore., Feb. 12 - GLG Partners, Inc. co-chief executive officer Noam Gottesman said Thursday that after immediate investment opportunities have disappeared in the convertibles and distressed debt markets, it will likely become more difficult to continue to find opportunities in those arenas.

"You're going to be able to make, I think, very good money in convertibles, very good money in convertible arbitrage, and very good money in distressed. It's just going to be with considerably less leverage.

"Once the glaring opportunities disappear, those will be harder because the leverage, I don't believe, will be as readily available," Gottesman said during the company's fourth-quarter earnings conference call.

Gottesman believes hedge funds are likely to "return back to the future," meaning they will return to former philosophies of focusing on absolute returns due to the large-scale unwinding and redemptions seen across the industry.

"In a zero interest rate world, I expect [hedge funds] will focus on absolute, not relative, returns and have the bravery to ignore the many hedge fund indices that led to relative thinking and ill-discipline," he said.

Gottesman noted that the predominant strategies of the late 1980s and early 1990s were equity long-short and macro.

Although there may be opportunities elsewhere in the meantime, Gottesman said he expects long-short and macro opportunities to remain in the forefront.

Gottesman also said GLG expects the current economic strife to cause individual global savings rates to increase; however, once a portion of debt is repaid, the inevitable question of return on savings will become more acute.

The co-CEO said investments are sure to grow again, although private equity, venture capital and real estate are not likely to be the first ports of call.

"Traditional hedge fund management will almost certainly be the first choice," he said.

GLG is a London-based alternative asset manager.

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