Foxhill Capital Partners LLC is an SEC-registered value-oriented event driven hedge fund with particular expertise in distressed and special situations. The firm is based in Princeton, New Jersey. It was established by Neil Weiner (pictured), CIO, in 2006, with the launch of the Foxhill Opportunity Fund, LP.
“Our fundamental research process is based on my more than 25 years managing hedge funds. Prior to founding Foxhill, I was a partner at Triage Capital, which during my tenure experienced an increase in capital from USD50m to nearly USD1bn. The foundation for our process was first developed at LibertyView Capital where I was a member of the executive committee and portfolio manager for both credit and volatility portfolios,” explains Weiner.
The Fund looks across the entire corporate capital structure for the best risk-reward opportunities as companies engage in restructuring. By combining fundamental research with the use of options, derivatives and futures to carefully hedge out credit, commodity and equity residual risk, Foxhill focuses on creating positions “with a margin of safety to mitigate permanent impairment of capital”, notes Weiner,.
“The portfolio is eclectic with many idiosyncratic investments which we expect will add value through time. We tend to focus on the undiscovered and under covered, with investments in niche situations. As a result of this focus and investment approach our portfolios tend to have little overlap with typical hedge funds.”
The Fund’s opportunity set largely relates to middle market opportunities in stressed, distressed, high yield, special situations, catalyst-driven events and capital structure arbitrage with a particular focus on small- and mid-cap US companies.
2013 proved to be a stellar year for Foxhill, producing a return of 27% net of all fees and expenses. An array of positions contributed positive returns to the portfolio as many of the catalysts, which formed the basis of those positions, came to fruition. Last year, by contrast, was more challenging, particularly in 2H14 when oil prices collapsed. Exposure to oil through stressed bonds cost the Fund a modest amount in contrast to the sector as high yield oil and gas bonds fell, on average, 14 percent in Q4 2014.
“During 2014, uncharacteristically, the Fund had several positions that exhibited an unusual amount of volatility. Several equity positions were up strongly in the first half of the year only to be down for the remainder of the year. Our shipping debt and equity positions proved to be volatile during the year with the Fund booking gains on some positions including an equity investment in a special situation NOL company that acquired a home builder and taking a short position on an oil services company.
“For the year, our largest contributor was an airline post-bankruptcy equity, while the largest loser was an LPG shipping company,” comments Weiner.
Weiner’s background in options and volatility trading forms the foundation for managing risk in the portfolio.
“At the position level, we focus on constructing positions that are option-like so that downside risk is limited, while the upside potential is significant. For the portfolio as a whole, I actively manage the exposure of the portfolio using options; preferably put spread strategies to both minimise downside and expense. We may also use options to manage position-related exposures and, from time to time, may use CDS, but we will only do so using specific company CDS, not index-related CDS,” confirms Weiner.
