Hamza Lemssouguer made his name at Credit Suisse with big, borrowed bets on European debt. He left and started Arini Capital Management in 2021. It quickly became one of the fastest-growing hedge funds. This year the bets went wrong. The Journal reports his roughly $7 billion flagship fund has lost more than 20%, and his own banks are calling for cash.
Arini has sold roughly $800 million of debt in recent weeks, people familiar with the matter told the Journal. Part of the reason was margin calls from the banks it trades with. The fund was down more than 20% as of mid-October and is set to lose more by month's end. The damage came from bets on troubled telecom companies. Altice International, Optimum Communications, Virgin Media and Brightspeed are on the list. Optimum is nearing a possible Chapter 11 filing. Brightspeed, backed by Apollo (APO), is weighing one by year-end. Bets on a label maker, Aston Martin and a building-products company added to the strain.
How a margin call works
A margin call is simple and brutal. You borrow money to buy more than you could with cash alone. The bank holds what you bought as collateral, its security for the loan. When prices fall, the bank wants more cash or it sells for you. So you sell what you can, when you can, at whatever price you can get. Arini sold its easier-to-trade holdings first. Some of that money went to cover trades on indexes of European company debt. Those indexes dropped as rates climbed and France's debt problems scared investors. The fund sold a veterinary hospital position in recent days. Months ago it sold a debt collector and a yacht line. It has trimmed a home-care company too.
None of this is proof the bets were stupid. Some may pay off for whoever buys them now. That's the point. Leverage took a bad year and turned it into a forced sale at the low. Arini isn't alone. The Journal says other hedge funds in European corporate debt and U.S. junk bonds have been hurt too. Arini is just the one with a name on it this week.
Our read
This is an Investments/Risk · IN04 story with a Behavioral core. We don't own Arini's fund, and we don't own this kind of strategy anywhere in our model books. Our verdict is on the method, not the man. Concentrated bets plus borrowed money is a recipe that works right up until it doesn't. Then the lender, not you, decides when you sell. That's the part people miss. A loss on your own cash is a loss you can wait out. A loss on borrowed cash has a clock on it. Private credit and high-yield debt are sold to regular investors as income. They can carry this same risk in a quieter form, and a year like this one shows where it hides.
Here's the connection to your own money. Log in to your brokerage account and look at the account type. If it says margin, you've got a line of credit against your stocks whether you've used it or not. Check that the balance is zero. Then open your 401(k) fund list and look for the words high yield or private credit in any fund name. Know how much sits there. Neither is a reason to panic. Both are reasons to know the number before a bad week asks you for it. Nobody wants to shop for a raincoat in the storm. If the fund list is hard to read, that's a ten-minute job in a review.