Arini's Master Fund Falls 32% Year-To-Date After October Rout

A sudden slide and how Arini explains it

Arini's master fund, run by Hamza Lemssouguer, fell 32% for the year through October as losses accelerated after Oct. 23, when the drawdown stood near 26%. October alone knocked 19.7% off performance, and the letter said credit markets remained persistently weak during the period.

Management pinned the hit on market mechanics rather than company results, citing collateralized loan obligations bumping up against CCC purchase limits and what it called "targeted shorting at uneconomic levels." The letter also acknowledged it "underestimated" the shakeout in CCC rated debt, which now accounts for more than half of the fund's exposure, creating a portfolio that moved in lockstep and magnified mark-to-market moves.

What the fund did and what it still believes

Arini reported that it conducted fresh due-diligence reviews on its five biggest positions, which together make up roughly two-thirds of net asset value, examining areas such as collateral protection, balance sheet liquidity needs, downside recoveries, and investor protections. "As for our core positions, let us be clear: Our conviction remains firm," the letter said, adding, "Mark-to-market volatility of this kind is inherent in a concentrated, contrarian mandate" and "The fund has the structural duration of capital to see these investments through to their catalysts." It trimmed some holdings, cut gross leverage to the lowest since early 2022 and plans to broaden the portfolio. "The core theses remain unchanged, with some catalyst timelines accelerating and some extended."

The firm said that over the past week it received $389 million in new investor capital as part of its $1.5 billion fundraising. A representative for the London based firm had no immediate comment.

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Size, growth and the wider cleanup

Hamza Lemssouguer - once a standout trader at Credit Suisse - has been navigating heavy credit market turbulence after years of strong gains. The firm, among Europe's fastest growers, opened with $1 billion in 2022 and expanded to a $21.7 billion credit-trading platform.

According to the letter, part of the drawdown reflects bets on lower-tier, weakest-rated corporate borrowers, with pressure from higher global interest rates, elevated energy costs and risks tied to the rise of artificial intelligence. Arini's credit bets include Altice International, Brightspeed and Aston Martin, all of which have faced financial strain and falling bond prices. The fund has already sold some positions in larger speculative-grade names, and dealers are negotiating with prospective purchasers for additional sales, among them Pacific Investment Management Co. and Oaktree Capital Management. So far, sales have centered on the most liquid and better-performing assets.

What this means for your portfolio

In plain English: concentrated exposure to the riskiest slice of credit can swing fast when technicals turn. Arini's response - re-underwriting core positions, reducing leverage, selling liquid winners and promising more diversification - shows how credit managers try to reclaim control when correlations spike. The bottom line: if you own credit-sensitive equities or funds, this is a live case study in liquidity, positioning and how quickly technical headwinds can swamp fundamentals.

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