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Numen Credit Opportunities Fund: Numen Capital

Tenth European Performance Awards 2010

Author: Hedge Funds Review editorial
Source: Hedge Funds Review | 27 May 2010
Categories: Hedge Funds

Best Credit/Distressed Hedge Fund: Shortlisted

Having returned in excess of 200% since inception in November 2008, fund managers of the Numen Credit
Opportunities Fund and principals of Numen Capital, Filippo Lanza and Kushal Kumar, are understandably pleased
with the running of the fund so far.
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The Numen Credit Opportunities works primarily in the European markets and focuses on credit special situations
and looks at anything from investment grade to distressed situations.

Managers Lanza and Kumar say the main trigger for their investment decisions is always a combination of
fundamental reasons and the confidence in a defined calendar of events (typically within three months) that would
"advance their fundamental thesis on the creditworthiness of the issuer of the securities".

Numen's investment philosophy is based on a strong understanding of credit fundamentals that encompasses
enterprise valuation, cash‐flow analysis, prospectus/document analysis, creditor rights and knowledge of bankruptcy
proceedings.

Lanza and Kumar, former Lehman Brothers executives, have worked since the mid‐1990s in the European and
Asian credit markets, where they have followed the credit special situation, high‐yield and distressed segments of
the market. They worked together at Lehman Brothers from 2001 to 2004. This period, they point out, was similar to
the ongoing cycle, characterised among other things by a liquidity crunch, high numbers of issuers with an
imbalanced liability structure, complexity of contractual borrowing arrangements, high volatility and price
dislocations.
The portfolio managers establish fundamentally driven positions largely on an outright long or short basis and
secondly on a relative value basis. They look to take advantage of pricing discontinuities in special situations
triggered by the unfolding of credit and company events.

Liquidity of the securities and the fund is a priority, the managers say. They say they try to implement the
investment strategies by using only the most liquid securities available in the relevant context.

Therefore the fund uses plain vanilla and liquid instruments such as corporate bonds and single-name credit default
swaps, cash equities and plain call/put options, together with ITRAXX credit indexes and listed equity indexes as
hedge overlays.

The similarity of market conditions to when the two principals worked together in the early 2000s, has led them to
believe there may be considerable opportunities to be taken advantage of in the months ahead.

They are convinced that most of the investment opportunities are a function of the ratio between the amount and
extent of mis-pricings in the market and the survived pools of human and financial capital ready and capable to
exploit them.

The managers also say they are "excited" about the opportunity set and think exceptional returns will be available to
credit investors for the next two years at least as the normalisation process happening in the capital markets will take
a considerable amount of time.

London-based Numen Capital London consists of a team of seven investment professionals managing over $120
million.

Fund facts: Numen Credit Opportunities Fund

Full name of fund: Numen Credit Opportunities Fund

Name of portfolio managers: Filppo Lanza and Kushal Kumar
Name of investment/management company: Numen Capital
Contact: Anne MacDougall, International House, 1-6 Yarmouth Place, London W1J 7BU (+44 (0)20 3006 6970)
Launch date: 2008
Assets under management: $120 million (at March 31, 2010)
Net cumulative performance since inception: 214.70% (at March 1, 2010)
Strategy: credit special situations
Share classes: US dollar, euro
Administrator: LaCrosse Global Fund Services
Auditor: Ernst & Young
Custodian: Credit Suisse,
Prime broker: Morgan Stanley
Management fee: 2%
Performance fee: 20%, with high water mark
Minimum investment: €250,000
Redemption period: monthly liquidity with a penalty of 5% for 45 days' notice and no penalty for 120 days' notice
and a sliding scale in between