Laks Ganapathi is launching Minerva Investment Management, a short-biased fund with Michael Burry as senior adviser, looking for vulnerable public companies in health care, retail, restaurants and smaller banks whose financing depends on private credit. The reported US private-credit default rate hit an annualized 6.3% in August, according to Fitch. The opportunity set is not a simple short of private-credit managers. It is the listed borrower whose reported equity value has not yet absorbed covenant amendments, payment-in-kind interest or the refinancing cost hidden inside an opaque loan book.
There are only six dedicated short-biased funds left, down from 54 in 2008. That scarcity matters operationally: the category's graveyard was created by negative carry, crowded squeezes and the ability of expensive equity to become more expensive before fundamentals arrive. Burry's presence supplies pattern recognition, not immunity from timing. Reuters, September 28