Canyon Partners' top executive says the hedge fund has a large cash position waiting on the sidelines, ready to be put to work after a sell-off.
The Los Angeles-based firm is "significantly underinvested" with capacity to deploy capital when prices become more reasonable, Canyon's co-CEO Joshua Friedman said in an interview with Bloomberg TV's Erik Schatzker in Davos, Switzerland. In the current environment where rates and spreads are low, the new issue market is "particularly unattractive," he said.
Mr. Friedman, who correctly projected the sell-off in 2018 amid rising rates, said this year will bring more volatility, a "sawtooth of ups and downs" in credit. When there's an adjustment in the market that's sudden and sharp, "you want to have a shopping list and cash ready to go to take advantage of it," said Mr. Friedman, who is also a co-founder of Canyon. "Sometimes the best names produce the biggest discounts or the best discounts for the risk" you're taking, he said.