Boussard & Gavaudan Holding Limited (BGHL) is a Guernsey closed-end investment company. It invests in multiple hedge fund strategies: convertible bond arbitrage, volatility trading, event-driven equity strategies, capital structure arbitrage, credit long-short, credit special situations, equity quantitative trading. It also holds an investment in Mexican real estate.
The company was founded by Goldman Sachs alumni, Emmanuel Boussard and Emmanuel Gavaudan. Fee structure : 1.5% + 20% with a high watermark. The monthly newsletter gives a good overview of the activity.
BGHL’s track record is shown below.
- This translates to over 8% per year since 2007 – a strong performance compared overall and compared to many other hedge fund strategies.
- Performance suffers in difficult equity markets – -12% in 2008, -3% in 2011, -6% in 2018 – and is boosted afterwards.
- However, no capture of the 2019 rally: performance has been flat so far this year.
As with many closed-end structures (see here for some background), the fund trades at a discount to NAV. But whilst the discount has remained at around 20% for many years, it has jumped to around 27% currently.
Are investors losing patience with the poor performance of the past 2 years and with the low-vol environment that is hurting the fund?
Should we ignore the past track record or argue that now is a good time given potential catalysts such as M&A activity, potential volatility spikes etc.?