Meridian, Somerset Vets Plan ETF Arbitrage Hedge Fund

By FINalternative, July 8 2009

Michael McCarty, the equity and options strategist who predicted Bear Stearns’ collapse just days before the Wall Street bank fell, is starting his own hedge fund.

McCarty and his partner, former Somerset Asset Management fund manager Bret Rekas, have founded Differential Investment Partners. Their maiden offering, due next month, will employ an exchange-traded fund arbitrage strategy, Bloomberg Newsreports.

“There’s an opportunity to create a portfolio with consistent, positive returns and little volatility,” McCarty told Bloomberg. “That’s the holy grail of investing.”

Differential’s crusade for that holy grail focuses on ETFs, seeking out pricing gaps in different ETFs that track similar indices and assets.

McCarty, who served as chief equity and options strategist at New York brokerage firm Meridian Equity Partners, wrote two days before Bear was bought by JPMorgan Chase that options trading showed the stock might be worthless. He and Rekas first worked together at Donaldson Lufkin & Jenrette, where they met in 1994.

Comments

[thomas adair]

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352-283-3326
HolyGrailToInvesting@hotmail.com