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Getting Started in Hedge Funds: From Launching a Hedge Fund to New Regulation, the Use of Leverage, and Top Manager Profiles, Third Edition by Daniel A. Strachman

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Appendix A

Hedge Fund Strategies

The following list defines a number of hedge fund styles and strategies that are being used by managers around the globe. The information was compiled by Hedgefund.net.*

Capital Structure Arbitrage A relative value fund that attempts to capture pricing inefficiencies among various tranches of debt or equity of the same or related companies.

Convertible Arbitrage Manager focuses on obtaining returns with low or no correlation to the market. Manager buys different securities of the same issuer (e.g., the common stock and convertibles) and works the spread between them. For example, within the same company the manager buys one form of security that he believes is undervalued and sells short another security of the same company.

Country Specific Manager focuses on a single country, or a few countries from a specific region. Russia- and Japan-focused funds have been popular in the last few years.

CTA / Managed Futures CTA is short for Commodity Trading Advisor. CTAs generally trade commodity futures, options, and foreign exchange, and most are highly leveraged.

Distressed Buying the equity or debt of companies that are in or facing bankruptcy. Manager hopes to buy company securities at a low price and that the company will come out of bankruptcy and the securities will appreciate.

Emerging Markets Manager focuses on investing in the securities of companies from emerging or developing countries.

Energy Sector Manager is primarily invested in securities ...

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