Steve Diggle is preparing to raise $250 million to launch a hedge fund and managed accounts that will capitalize on market crashes and profit from stock bets in stable times.
According to a recent Bloomberg report, Diggle said in a phone interview that fundraising could begin as soon as the first quarter. His previous firm, Artradis, made a staggering $3 billion during the 2007-2008 financial crisis. Today, Diggle sees market risk levels not seen since 2008 and is putting himself in a position to capitalize on coming opportunities in potentially volatile times.
The former hedge fund manager rode the turbulence of one of the most turbulent market periods in history to wealth, and he thinks there’s a repeat brewing.
Steve Diggle’s former firm is worth nearly $5 billion
Making his most significant move since shutting down his former firm, Artradis Fund Management, in March 2011, Steve Diggle is coming back to volatility trading in a big way.
In 2008, when Artradis was still in Singapore, the company was nearly worth $5 billion thanks to winnings it made when betting on market crashes and banking problems. However, the firm struggled in the end, as an unprecedented turn in central bank intervention shifted market dynamics.
Diggle sees similarities with the pre-crisis years, 2005–2007. The number of fault lines is higher, and the chance of something going wrong is way higher,” but risk prices have dropped,” he said.
He believes years of easy monetary policy have resulted in a brittle market landscape, but now the market is effective for a sudden wave of volatility.
Tail risks in a fragile market
Diggle said that the “bull market generation” of traders that entered the market after the 2008 financial crash have pushed the prices of a small group of US tech stocks and cryptos to unsustainable heights. Simultaneously, instruments that allow traders to hedge against potential market downturns have become cheaper, he added.
Diggle will make his return to high volatility trading through the launch of a new hedge fund called Vulpes, which will offer managed accounts to clients. The fund will incorporate Artificial Intelligence (AI) models to analyze extensive public data to identify Asia-Pacific companies that appear to be at risk of financial turmoil. This will include companies that currently have excessive leverage, asset-liability mismatches or companies that show signs of fraud.
Other risks that were highlighted as the foundation for the new Vulpes fund include geopolitical tensions, banking challenges in China and high-frequency investment fund traders who Diggle believes will likely exacerbate routs, similar to how they did in March 2020 and August 2024.
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