Calamos Investments, the family-run diversified investment firm, thinks it has found a silver lining to the credit crunch and is making a bold bid to reap some much needed rewards.
John P Calamos Sr and nephew Nick P Calamos have announced that the company's convertible securities fund will reopen for the first time since it was closed to new investors in 2003.
The Illinois-based business, which claims to have pioneered convertible securities as an asset class in 1977, says it has had many requests to reopen the funds over the past five years, but has resisted until now.
"Our response has always been 'not until we identify a significant opportunity that may be advantageous for both new and existing investors,'" said Calamos Sr. "Well, we now think we have found one."
The reason for this optimism is the numerous undervalutions that the recent market turmoil has caused, and the attractive risk/return profiles for those investors who can look beyond the current crisis.
"The general de-leveraging of the capital markets has created immense pressure on convertible valuations. Forced selling by prime brokers going out of business and convertible arbitrage hedge funds has caused prices to fall across the entire convertible market," said Nick P Calamos.
"Some of the selling appears to be coming at any price, as participants make a desperate attempt to get out of positions. While hedge fund participation has arguably made the convertible market more efficient, hedge funds can also increase the short- term inefficiencies of the market as they may be forced to sell for non- fundamental reasons," he added.
However, the company advises investors to act quickly as the window of opportunity may be small given current market turmoil.