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Investment Approach

Our management style combines fundamental analysis with a thorough expertise of financial instruments. Boussard & Gavaudan applies an event driven, multi-strategy investment approach designed to generate consistent returns over different market cycles. Our investments are rigorously screened for catalyst to create value, finding opportunity in complexity.
With a strong emphasis on risk management and high ethical standards, both from an investment and an operational side, we always put interests of our investors at the forefront of our decision-making process.
Our investment team is composed of experienced fundamental and catalyst focused analysts working in combination with traders who have extensive multi-asset, derivative and arbitrage experience. Many members of our team have been with the firm for over a decade. Our team of analysts has long-standing experience in Investment Banking giving them a significant edge in their sectors of expertise.

  • Volatility strategies
  • Equity strategies
  • Credit strategies
  • Trading strategies

Convertible bond arbitrage involves purchasing a convertible bond, which is a security issued by a company that may be converted from debt to equity at various prices and points in time. There are many types of convertible bond, including mandatory convertible bonds which have predetermined and fixed conversion or redemption features. The hybrid nature of convertibles, combining both fixed income and equity characteristics, can be exploited through an arbitrage when the price of the convertible bond differs from the sum of the value of each of its components. Investors can purchase (or sell) the convertible bond at a discount (or premium) to its fair value and hedge one or more of its components. In general, arbitrage opportunities arise when the equity option embedded in the convertible bond is, for a variety of reasons, priced differently to those of equivalent pure options that may exist in the market. Hence, the equity component is often hedged by selling short the underlying common stock.

Volatility arbitrage is an investment approach that seeks to exploit volatility pricing discrepancies across related instruments. For example, it is quite common for arbitrage opportunities to exist between warrants issued by a company to its shareholders and the corresponding equivalent options available in the market. This is capitalised upon by buying the warrant and selling the corresponding equivalent option. This particular strategy is referred to as corporate warrant arbitrage. Generally, managers focusing on volatility arbitrage tend to maintain market neutral portfolios that can profit from the tendency of volatility to oscillate around a mean.

Gamma trading is an investment approach that seeks, through the trading of options and other derivative instruments, to take advantage of anticipated or unanticipated dislocations in financial markets, such as market crashes. To determine a gamma trading opportunity, the managers will compare the implied volatility embedded in an option with recent realised volatility in order to find an implied volatility discount. Fundamental analysis is used to try and determine the cause of the discount and potential catalysts for a significant change in volatility.

A merger arbitrage strategy is a special situations strategy centred on announced merger and takeover transactions. Trades will generally involve taking a long position in the target company’s stock and, in some instances depending on whether the transaction is a cash or share offer, a corresponding short position in the acquirer’s stock. Investors assess the probability of various scenarios and the time-frame for completion and seek to capture the ‘‘merger spread’’, being any value that will be realised upon successful completion of the merger.

A special situations strategy involves trading the securities of a company involved in a significant anticipated capital market event or ‘‘special situation’’. Examples include spin-offs, divestitures, re-organisations, liquidations, restructurings, and share buybacks. Through scenario analyses, investors assess the expected value of the securities upon completion of the transaction, the time likely to be involved before completion and the possibility that the transaction will not be completed at all. The uncertainty around these special situations creates investment opportunities for those who attempt to anticipate correctly their outcomes. Profits can be generated by purchasing the securities at a discount to the value at which they will be realised upon completion of the transaction.

An equity long/short strategy involves the construction of a portfolio of long and short equity positions, sometimes supplemented with derivatives. Investors attempt to add value primarily through stock selection and the determination of corporate events that can act as catalysts for changes in valuation. Stock selection is based primarily on fundamental analysis of companies. Stocks perceived to be undervalued are bought and stocks perceived to be overvalued are sold short. Managers will also sometimes seek to take activist roles on corporate governance and management in an attempt to trigger catalysts.

Value investment is an approach that involves buying shares in companies that are perceived to be significantly undervalued versus their intrinsic fair value. When applying this approach, investors are often unable to determine an immediate catalyst that may trigger the convergence of the stock price to its fair value. However, fundamental analysis suggesting a significant undervaluation present longer-term profit opportunities. Value investors often identify companies operating in mature sectors with strong cash flow generation or small cap companies.

A capital structure arbitrage strategy is based on pricing inefficiencies across different components within the capital structure of the same company or a related company. Such pricing inefficiencies present relative value opportunities either within the debt structure or across equity and debt securities of the company. Investors applying this strategy seek to take advantage of valuation discrepancies within a company’s capital structure by taking a long position in the under-priced security and a short position in the overpriced security.

Credit long/short strategies involve identifying relative value opportunities between corporate securities of companies in similar industries or sectors. Opportunities are not driven by the consummation of an event and do not involve the securities of companies that are or likely to be in distress. These relative value opportunities are identified via extensive fundamental credit research whereby investors seek to capture either the divergence or convergence of credit spreads between corporate securities of companies in similar industries.

Restructuring or distressed securities strategies involve buying securities, often debt instruments, of companies that are (or are likely to be) in distress and therefore trade at a significant discount to their redemption or fair value. Investors will determine, on the basis of fundamental research, a scenario and risk analysis, a clear understanding of the legal framework surrounding the specific company’s distress and whether the securities’ price fails to reflect the company’s intrinsic value.

Restructurings will often be very lengthy processes and involve a proactive involvement in the financial and operational running of the company. They may also involve significant legal proceedings to enhance and crystallise the underlying value.

Private credit is a broad term for investments in primary or secondary loans that are not widely or publicly syndicated and which can have a variety of different structures and terms. Private credit covers a range of sub-strategies including bridge finance, real estate, corporate lending, specialty finance and consumer credit. BG focusses predominantly on senior secured loans in the small to mid-cap segments. Compared to syndicated loans of equivalent credit quality, private credit typically commands a higher margin and benefits from more advantageous contractual terms. These more favourable conditions for the lender compensate for the lower liquidity of private credit compared to syndicated loans. 

Thanks to BG's proprietary sourcing, often through long-term partnerships, BG is well-positioned to benefit from bank retrenchment and to access lending opportunities offering attractive yields and strong downside protection.


This strategy analyses short and long term stock momentum to capture various momentum biases. It combines these with systematic methods, which model trading intuition, to anticipate stock reversals or identify new portfolio candidates early on. The strategy harvests a supplementary risk premium as well as providing a useful risk management component.

This strategy aims to deliver absolute returns over a medium to long term horizon using an algorithmic trading system to identify trends in different markets. The strategy combines a long term investment view with geographical and technical diversification. It is implemented through multiple models with different time horizons across all asset classes and from a universe of 2000+ liquid single stock equities. This strategy is mainly used as a risk management tool within our vehicles.

The strategy is based on the interpretation of large global macroeconomic trends. It is implemented through liquid instruments and across all asset classes. This strategy is mainly used to take advantage of macroeconomic events and compensates for its directional nature by maintaining a positive asymmetry through the use of options and strict risk management.

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