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Industry Vets Reunite to Run Buyside Shop
Asset Backed Alert, Harrison Scott Publications Inc. (February 9, 2007)

Two longtime industry players who first worked on deals together in the mid-1990s have reunited at an investment shop that will buy and issue securitized products.

The duo, Alan Brody and Richard "Guido" Gugliada, are pursuing some of the holdings through a hedge fund they launched on Feb. 1. They'll also park investments in a series of collateralized debt obligations they plan to issue through their New York outfit, called Epirus Capital.

Brody founded Epirus in October and serves as the firm's head portfolio manager. He brought in Gugliada as his first hire two weeks ago and installed him as a managing director. Gugliada, most recently of S&P, is responsible for structuring the outfit's CDO offerings and analyzing CDOs it would target as investments.

The pair are now talking to several more structured-finance professionals, in an effort to boost the overall size of the operation to four or five people by midyear.

Epirus also draws on support staff from Brody's most recent employer, New York hedge fund manager Colonial Asset Management. In addition, Colonial supplies the firm with office space, computers, back-office and administrative services, and access to its chief financial officer.

Right now, Epirus' priority is recruiting investors for its hedge fund, Dodona Master Fund. The vehicle is set up to invest heavily in CDO equity pieces, and elsewhere in the capital structure of CDOs that either issue credit default swaps or are backed by such instruments. It may also act as a counterparty in swap transactions. Most of the synthetic deals would be tied to structured products, especially subprime-mortgage bonds.

Brody said he expects to raise $100 million for the fund by yearend and eventually collect $300 million to $1 billion. Epirus would borrow against the equity to fund up to twice that amount of investments.

The first of Epirus' planned CDOs, meanwhile, would come during the second half of this year. It would be followed by another offering before yearend, along with four transactions in 2008. Each of the deals would invest in a mix of structured products, including funded home-loan securities and credit derivatives tied to those types of instruments.

The size of Epirus' CDOs will depend on market conditions. The firm may also look into setting up a structured investment vehicle, which would issue asset-backed commercial paper and medium-term notes to fund billions of dollars of investments in top-rated structured products.

Brody made a name for himself in securitization circles from 1989 to 1993, when he worked at the former First Boston. During his last two years there, he ran the bank's asset-backed securities trading desk.

Brody then became head of ABS capital markets and trading at Salomon Brothers. The capital-markets side of his job entailed working closely with issuers seeking funding, including Citibank - where Gugliada was overseeing an in-house credit-card securitization program.

While Citi's parent eventually took over Salomon, Brody and Gugliada were never employed by the bank at the same time. Brody left in 2000 to become a senior portfolio manager at Colonial, where he ran a book of investments in stocks, commodities, interest-rate products and the like for six years.

Gugliada, meanwhile, was moving between several prominent roles. His departure from Citi came in 1995, after 13 years at the bank. After that, he logged 15 months as head of securitization at lender CIT Group. He then landed at S&P, gaining a high profile as leader of the agency's CDO-rating group.

In 2005, Gugliada shifted to the top role in a quantitative-analytics unit at S&P, where he remained until leaving for Epirus. William Morokoff has since replaced him, after arriving at the agency from Moody's KMV in November.



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