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ALVA Disruptive Credit Opportunities Fund (ADCO)

ALVA Capital LLP

Company Overview

ALVA Capital LLP is a next generation investment manager, specialising in disruptive corporate credit. The inspiration for creating ALVA was the realisation that technological disruption is creating value dislocations in the corporate credit markets resulting in superior investment opportunities.
We bring real business experience to all of our investment decisions and are supported by a board of advisors who bring over 100 years’ of blue chip corporate experience (Microsoft, Coca Cola).

Fund Strategy

We look at industries that are being disrupted by technology and try to capitalise on the price dislocations that occur as businesses transition their models from the analogue world to the digital. Our strategy is highly focused and we aim to run only 15-20 exposures at any given time, each position idiosyncratic, with no pair trades and no relative value angle. We mainly take our credit risk in the HY bond market, but will occasionally consider other asset classes if that is the only route to the exposure we’re after. Our long positions are taken in the 50-85c price range, with a target of the par area and a (worst case) floor of recovery value – these will typically be companies who are transitioning their analogue business models to the digital world, their price having dropped sharply as they increased leverage/changed management/reorganised, but who we believe will be successful in reinventing themselves. Short positions are taken only at prices of 90c+ thus capping our downside (though clearly these are more expensive to hold) – these will typically be companies who are failing to address the impact of technology on their business model and are reaching the point of no return. When combining these price thresholds with our investment theses we require that our expected gains are multiples of our expected losses - that is a strict investment criterion which we believe can produce near equity-like returns whilst taking only bond risk. We look only at well-established technological disruptions and don’t try to find the next Uber and neither do we buy Amazon and sell Sears, for example. Each trade is a free-standing conviction which we expect to hold for between 9 and 18 months, in most cases. We are targeting double-digits annual returns.

Quick Facts

Category: Credit
Fund Launch Date: 2016-02
Monthly Performance Data:
Sep 0.58%

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