Tidan Fund, a Stockholm-based hedge fund specialising in opportunities across corporate capital structures, marked its four-year anniversary in September with its strongest month on record: a 10.6 percent gain, nearly double its previous best monthly return. This lifted the fund’s year-to-date performance through September to 6.8 percent, following a strong 2024 when Tidan ranked among the region’s top-performing hedge funds with a return of 34 percent.
On the surface, today’s credit environment with high-yield spreads near record lows might seem unfavourable for a strategy that earns part of its return from hedged credit carry. According to the team, however, “while the broader credit market is priced to perfection, much like other areas of the capital markets, there remains a healthy degree of bifurcation within credit itself.” That dispersion drives corporate actions and balance-sheet adjustments that transfer value across the capital structure, sustaining a steady flow of opportunities.
“While the broader credit market is priced to perfection, much like other areas of the capital markets, there remains a healthy degree of bifurcation within credit itself.”
Value Transfer and Market-Neutral Strategies
Tidan’s value transfer strategy is designed to capture mispricings that emerge across a company’s capital structure – typically between its equity and debt – particularly during corporate events such as equity raises, restructurings, or refinancings. The fund seeks to exploit these imbalances by going long the undervalued instrument and short the overvalued one within a market-neutral framework. When corporate actions lead to a shift in value between debt and equity, Tidan benefits from that transfer of value across the capital structure. This market-neutral setup allows the fund to focus on relative value rather than market direction, resulting in consistently low correlation to broader equity and credit movements.
The pace of value-transfer opportunities has been slower this year than a year ago, when Tidan gained 34 percent in 2024. This has contributed to higher volatility in the fund’s performance during the first half of 2025. However, the market dislocations that accompanied that period ultimately set the stage for September’s strong result, the fund’s best month since its launch in October 2020. As Tidan Fund typically holds capital structure positions for 12 to 18 months, performance is best evaluated over a longer horizon.
A significant tailwind for Tidan this year has been the strength of the convertible bond market. Global convertible issuance reached a record $30 billion in September, on track for more than 50 percent growth compared with 2024. According to CIO Michael Falken and portfolio manager William Wilson, convertible issuance often serves as a catalyst for the fund’s value-transfer opportunities. One example is Tidan’s long-standing long convertible bond versus short equity position in NIO, initially a drag on performance earlier in the year, but it turned positive once the company’s long-anticipated equity raise took place, a textbook illustration of a value-transfer event.
Investor Confidence and Emerging Opportunities
“We know dislocations will occur, and we appreciate that our investors understand this too,” the team said. The Tidan Program has experienced steady growth in assets under management, surpassing the €100 million mark around mid-year and reaching €139 million by the end of September. This increase reflects investors’ patience and confidence in the fund’s strategy.
“We know dislocations will occur, and we appreciate that our investors understand this too.”
Looking ahead, the team identifies private credit as an area with notable dislocation opportunities. “The rapid expansion of this market has been one of the defining themes across credit in recent years, attracting significant inflows and driving valuations and spreads to levels that suggest complacency,” the team notes. The recent First Brands bankruptcy, however, has revealed emerging fault lines. The team sees this segment as one where market perceptions of stability may not fully reflect underlying risk. “This creates asymmetric short opportunities in the equities of firms that have been key beneficiaries of the boom, including alternative asset managers, business development companies, and specialised real estate finance lenders.”
“The rapid expansion of this market [private credit]has been one of the defining themes across credit in recent years, attracting significant inflows and driving valuations and spreads to levels that suggest complacency.”
Another positive dynamic is developing in Tidan’s equity market-neutral sleeve. Constructed through a cross-capital-structure lens, this strategy focuses on identifying relative winners and losers based on both operational performance and financial leverage. “With themes such as AI winners versus losers proving so powerful, relative-value positions in this space have played out much more quickly than in prior years,” observes the team.
In the U.S., AI- and crypto-related companies have been active issuers in the convertible bond market, creating additional opportunities for Tidan. The fund identified that many Bitcoin miners and their large data centre assets were undervalued relative to their potential repurposing for AI compute. At the same time, Bitcoin treasury companies were trading at premiums to their net asset value, presenting a compelling relative-value setup.
