Klarman Cub Fidalgo Buys Cheap Korean CDS, But Will It Pay Off After Nuclear War?

There are some risks that can’t be quantified, and that’s just fine with Seth Klarman “cub” and former employee Miguel Fidalgo. Like the value-focused master under which he received his real-world tutelage, the founder of Triarii Capital Management knows that certain market situations are too complex and nuanced for a computer to understand.

Take the South Korean credit default swaps (CDS) Triarii Capital Management recently purchased at a discount. Like a shopper serendipitous-ly finding that amazing buy, Fidalgo found a bargain that appeared to be mispriced on the risk of a Korean mishap of some sort. But he wasn't shopping for shoes or a suit in the region. Rather, Triarii Capital Management found unrecognized and underappreciated...