Santangel's Review

Commentary

Seth Klarman Using Currency Swaps to Hedge?

We once wrote that a surprising place to get a clue into Seth Klarman’s thinking was at the racetrack. Klarman, who owns a stable and races horses professionally, has been naming his horses after big macro themes lately. Some recent names have been WorstCaseScenario, Economic Swoon, Globalization, and Sovereign Default. Today we learned about a new horse named Currency Swap. Klarman’s ability to find low cost hedges or “cheap insurance” has been a key ingredient to his success over time, so this name piqued our interest. While we don’t know which currency was hedged, this is certainly an area worthy of study for managers looking for cheap insurance.

Note: The horse is a few years old so the hedge may be dated (or more expensive) as well.