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Digital Subscriptions > The Hedge Fund Journal > Issue 129 – January 2018 > Jonathan Berger’s Birch Grove

Jonathan Berger’s Birch Grove

An a la carte strategy menu

TOMORROW’S TITANS REVISITED

Birch Grove Capital’s founder, Jonathan Berger, was selected for The Hedge Fund Journal’s biennial 2014 ‘Tomorrow’s Titans’ survey, sponsored by EY. Since launch in 2013, the firm’s assets have grown from USD 300 million to USD 1 billion as the investor base has filled out, and more granular strategy solutions have been devised in response to client needs. “We have the capacity to be larger but there is no specific target for assets. Assets are a consequence of the market opportunities that exist and how that lines up with investor demand,” says Berger. There are now five offerings, and other sub-strategies could be carved out of the multi-strategy repertoire.

The first and flagship strategy is unconstrained, multistrategy credit, (profiled by us in June 2016 under the title ‘Birch Grove’s Versatile Credit Strategy’) and pursuing event driven long/short, directional long/ short, credit relative value, capital structure arbitrage and structured credit, across the entire corporate capital structure. The strategy has outperformed the HFRI hedge fund index by 13% with about a quarter of the volatility. “It is a consistent and repeatable approach designed to produce low volatility returns for institutional investors,” says Berger.

In response to reverse inquiries from clients, Birch Grove began providing focused access to strategies in the multi-strategy portfolio. Firstly, bespoke funds of one, providing low beta, high quality income solutions, by investing in diversified portfolios of floating rate, secured credit. Secondly, co-investment opportunities – which Berger terms tactical investments – targeting somewhat higher returns and revolving around mid-market stressed and eventdriven special situations. Thirdly, a private credit strategy, launched in August 2017, also has an event driven flavour, sourcing neglected mid-market opportunities where events are anticipated within one to two years; this is distinguished from many direct lending strategies that are closely linked to buyouts from private equity firms and financial sponsors. Finally, credit hedging – including portfolio tail risk hedging – using tranches and credit options, bespoke to some client needs (though Berger admits that most of the firm’s clients do their own hedging). None of this has followed any preconceived game plan. “We listened to investors and tried to be creative in marrying what they were looking for with what we did,” explains Berger.

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Informing the Hedge Fund Community. With access to some of the industry’s biggest names and an astute and talented group of writers and contributors, The Hedge Fund Journal has established itself as a trusted source of information on the hedge fund industry.
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