In the Press: This Week's Hedge Fund Alert

I’m quoted in Hedge Fund Alert, Aug 5, 2015, reproduced without permission.

Muni-Bond Firm in Growth Mode

Municipal-bond investor Maritime Capital is adding staff and developing its own trading technology amid a sharp increase in assets under management.

The New York firm, whose assets ballooned from $150 million to $325 million in the past six months, hired Jarret Roth from Bank of America last month as head of strategy and risk management. His arrival coincided with the launch of an execution-management system Maritime built in-house after outgrowing vendor-supplied software it had been using.

Maritime is among a handful of hedge fund shops specializing in municipal bonds. The firm, founded in 2010 by Greg Gurevich, has capitalized on increased market volatility tied to expectations of rising interest rates. Adding to the turmoil is the fact that many banks have scaled back their market-making efforts in the face of more costly regulatory-capital requirements.

Unlike conventional long/short equity funds, which have access to state-of-the-art trading software developed by Advent Software, Eze Software, REDI Global Technologies and many others, municipal-bond managers have few options when it comes to off-the-shelf technology products. Maritime, for instance, had been relying on what chief technology officer Hilton Lipschitz described as “repurposed” software that an unidentified vendor had developed some 15 years ago.

Unsatisfied with the software’s capabilities, Lipschitz spearheaded the development of a proprietary system capable of processing vast amounts of data. Consider that the universe of municipal bonds includes some 2.1 million potentially tradable issues, with an average of about 50,000 different bonds changing hands each day, according to Maritime.

“Compare that to the number of securities in other asset classes and your head is already exploding,” Lipschitz said.

The in-house system went live last month. “Things that took five minutes now take a few seconds,” said Lipschitz, who joined the firm in 2013.

The rapid build-up of Maritime’s asset base followed the arrival in January of Christine Egan, the firm’s first full-time marketer. She previously worked at fund-administration shop Kaufman Rossin Fund Services.

Follow the author as @hiltmon on Twitter.

Posted By Hilton Lipschitz · Aug 5, 2015 11:14 AM