- $18.5 billion hedge fund manager BlueMountain is losing its head of fundamental credit, Omar Vaishnavi, who has been at the firm for a decade.
- Vaishnavi led three teams — distress and special situations, long-short credit, and credit traders — that had 11 analysts, three traders, and one portfolio manager in total, according to a presentation Vaishnavi gave at a mid-June conference. One of those analysts, Lana Khabarova has since left.
- Vaishnavi pitched oil and natural gas company Weatherford International’s unstructured debt as an investment idea. His presentation said the bonds were worth double what they were trading for in June.
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BlueMountain Capital is losing its head of fundamental credit, Omar Vaishnavi, who just over a month ago was pitching a room full of peers on an investment idea: the debt of a soon-to-be bankrupt oil and natural gas company.
Vaishnavi was one of BlueMountain’s 13 partners, and was with the firm for a decade, according to his LinkedIn profile. He had been running distressed and special situations, long-short credit and credit trading teams ahead of his departure, which the firm confirmed to Business Insider on Friday. Bloomberg was first to report he was leaving the firm.
At the Ben Graham conference held by the CFA Society New York in June, though, Vaishnavi was still very much with the firm and presented on Weatherford International, a Houston-based oil and natural gas company that declared bankruptcy just a couple weeks after the presentation.
Vaishnavi’s presentation predicted the unsecured debt in the company would double in value after the Chapter 11 bankruptcy filing, but that other investors were missing the opportunity because “many funds lost money during the prior management team’s control and it will take time to reverse this mindset.”
“Multiple funds experienced losses from energy investments in 2014-2018 and are hesitant to add new exposure,” the presentation reads.
The presentation, given on June 19, predicted that the bonds would eventually trade for more than $100, a price which the bonds have not hit since oil prices crashed in late 2014.
BlueMountain believed Weatherford’s bankruptcy will result in one of two scenarios: that the company restructures and emerges as a public equity in two years, or it sells itself, either in parts or as a whole, over the next three years.
Bondholders are expected to receive all but 1% of the company’s equity in the restructuring plan, which needs to be court-approved. Existing shares in the company are expected to be cancelled along with about 70% of the company’s debt.
Vaishnavi’s presentation also gave a breakdown on the teams that reported to him within the $18.5 billion hedge fund. Distressed and special situations, which had eight analysts, and long-short credit, which had three analysts and Rushabh Doshi, a portfolio manager, both reported to him. One analyst from the long-short credit team listed in the presentation, Lana Khabarova, has left the firm since the presentation was given.
He also had a team of three credit traders, led by Jeff Dardarian.
The fundamental credit team will now be run by Doshi and distressed and special situations analyst Hugo Villarroya, the manager told Business Insider in a statement, with Doshi in charge of the US team and Villarroya leading the European side. They will both report to founder and CIO Andrew Feldstein.
Sources familiar with the firm’s position in Weatherford say it is down year-to-date, but within risk limits.
The firm has struggled in 2019, and has axed a pair of strategies — systematic equity and long-short equity — that were not profitable. On a recent earnings call, BlueMountain investor Affiliated Managers Group stated the company’s profitability is expected to go up by the year-end.
While the firm has cut people from the two strategies it closed, BlueMountain has also added 10 people over the last 12 months to several teams it is prioritizing, including fixed income, healthcare, infrastructure, and collateralized loan obligations.