New Hedge Fund Will Target Private Credit Strain
Investors are launching a short-biased fund to profit from rising default rates in the US private credit market.
Updated on Sept. 28, 2026 in Investing
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Minerva Investment Management plans to launch a new short-biased hedge fund in September 2026. The firm aims to profit from declining stock prices, specifically targeting sectors facing pressure from rising borrowing costs.
Why it matters
The fund focuses on borrowers within the private credit market, which saw default rates reach 6.3% in August 2026. This activity highlights growing investor concern over financial stress in sectors such as healthcare, retail, and smaller banks.
The U.S. private credit default rate hit 6.3% in August 2026. Meanwhile, the number of dedicated short-biased hedge funds has dropped significantly to just 6 in the second quarter of 2026, down from 54 funds operating in 2008.
The players
Minerva Investment Management
An investment firm launching a new hedge fund strategy that targets stock price declines.
Michael Burry
A financial investor and senior adviser who previously managed Scion Asset Management until its closure in late 2025.
Laks Ganapathi
The founder of Minerva Investment Management.
The details
Minerva Investment Management utilizes short positions to capitalize on declining stock prices. The fund actively scans various sectors, including healthcare, retail, restaurants, and smaller banks, to identify businesses showing signs of financial strain. By targeting companies vulnerable to credit issues, the fund seeks to profit as these specific segments of the economy underperform.
Timeline
2008: There were 54 short-biased hedge funds active in the US.
Late 2025: Michael Burry closed Scion Asset Management.
Q2 2026: The number of active short-biased hedge funds fell to 6.
August 2026: The US private credit default rate reached 6.3%.
September 2026: Minerva Investment Management plans to launch its new fund.
Money Landscape
The shift from 54 active short-biased funds in 2008 to just 6 in the second quarter of 2026 demonstrates a long-term decline in this specific investment strategy. The launch of a new fund in this climate represents a counter-trend against a decade-long contraction in short-biased market activity.
Rising default rates in private credit may signal broader economic tightening that can affect interest rates and access to bank loans. If you are concerned about your portfolio exposure, consult a qualified financial professional to review your diversification.
The takeaway
The return of specialized short-selling funds highlights the risks currently embedded in private credit markets. Keep a close watch on monthly default rate reports as a gauge for underlying financial health in the sectors you invest in or rely on for employment.
Further reading
Learn more about the fundamentals of market risk and how different strategies function in our guide to investing.
Live Poll
Do you believe private credit markets pose a serious risk to the national economy?
