After a 12.1% March Drop, GA Courtenay Fund Leans on Hedging and Diversification for Recovery

The GA Courtenay Special Situation Fund declined by 12.1% in March, bringing its first-quarter performance to -1.2%. An oil price spike caused the majority of the decline, pushing capital into energy-defensive sectors. According to Ex-Odey key man-Adrian Courtenay, the fund manager, in April, stocks started to recover from losses made in March.

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The hedge fund blamed the poor month through several portfolio actions. Courtenay avoided overreaction and focused on the decision that should bring benefits in the long term. However, before the market drop, the team increased portfolio hedging positions. The team either sold the fund’s put options at their peak or rolled them. Regarding the risk management adjustments, the fund resized portfolio positions so that in case of another drawdown, losses were limited. Among other actions, Courtenay also increased arbitrage capture, aiming at pricing inefficiencies.

Monthly Commentary

As noted in the February factsheet, an advantage of the fund’s approach is its ability to safely leverage its investments. The strategy relies on combining the portfolio with a positive carry hedge. For the leverage to remain effective in the future, the hedge must come with a low cost. Additionally, a long equity book avoids the risk of over-concentration in any single risk factor.