The US$5 billion hedge fund Hudson Bay Capital Management is seeking to raise capital for a new share class designed to take advantage of the market sell-off.

“The dislocations to come will provide amongst the most outstanding opportunities of my career,” Sander Gerber, who oversees the New York-based firm, said Tuesday in a letter to investors. “To take full advantage of these opportunities, we will be setting up new share classes within our multistrategy fund to supplement investments in the main portfolio.”

A Hudson Bay representative declined to comment.

The share classes will be more concentrated and provide clients with “direct exposure” to investment opportunities in equity and credit, according to the letter. The firm isn’t targeting a specific amount for the fundraising. The classes are expected to be a drawdown structure that will allow the fund to call capital from investors as opportunities arise.

About US$26 trillion has been wiped out from equities since mid-February, when concerns about the coronavirus spreading began gripping markets. Investors have been sifting the wreckage and weighing the chances of a lasting rebound as Congress reached agreement on a US$2 trillion stimulus package to prop up the slumping economy.

Credit markets, particularly those for riskier borrowers, have also been roiled amid concerns of an economic recession and unprecedented investor redemptions. The Bloomberg Barclays index for U.S. high-yield bonds has plunged 18 per cent this month, while investment grade debt has lost 12 per cent.

Price Dislocations

Hedge funds have been marketing this month’s sell-off as a once-in-a-lifetime opportunity to take advantage of unprecedented price dislocations across stocks, bonds and commodities. Their success in luring investors amid the market collapse sparked by the deadly pandemic –- a shock some are calling a black swan event -- may depend on how well they have navigated the chaos so far. Some have barely lost money, while others have seen drops more in line with market sell-offs.

Hudson Bay gained 1.2 per cent this year through March 23, and has declined less than 1 per cent this month, according to a person with knowledge of the results, who asked not to be identified because the matter is private. The firm gained 8 per cent last year.

Several long-biased equity, credit and relative-value hedge funds opened this month to tap money from existing clients, UBS Group AG said in a note sent by its prime-brokerage unit on Friday. Hedge funds seeking to raise money include D.E. Shaw & Co., Citadel and Baupost Group.