he debt markets are sending a warning; that’s the key takeaway from Mitch Julis‘ Canyon Value Realization Fund L.P.’s second quarter letter to investors reviewed by ValueWalk.
The fund returned 3% for the second quarter, net of fees and expenses, bringing year-to-date estimated net returns through June 30 2.81%. In the last quarter the fund made a number of changes to its portfolio significantly to reduce the risk profile of the fund. Many of Canyon’s recent investments have been in, “ballast” securities that, “are likely to anchor the portfolio and subdue its risk profile across a relatively broad spectrum of potential macro outcomes.” The letter continues “In general, we have found the implicit medium-term protection embedded in these kinds of assets to be undervalued relative to the explicit short-term protection offered by traditional hedges, particularly in a market that continues to resemble a global central bank coordinated short squeeze.” Recent investments include:
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