One by one, the opportunities to make arbitrage profits out of convertible bonds have disappeared. It’s no wonder the smartest hedge funds are bailing out.
GLG, one of the biggest, recently entered talks to sell itself to Lehman Brothers. And a US fund, Marin Capital Partners, was forced to place restrictions on investors that wanted to withdraw their money after fund of funds giant Man Group withdrew seed capital from it, according to reports.
Convertible arbitrage was once a sexy strategy.
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