The founding partners of SunTx Capital Partners have joined forces with veteran portfolio manager Ron Dodson to launch IXTHYS Capital Management, a new hedge fund investment manager, headquartered in the firm's offices in Dallas, TX.

Dodson, a derivative instruments trader with nearly 20 years of experience, will serve as IXTHYS’s portfolio manager. He was most recently the portfolio manager at NorCap Investment Management, overseeing the firm’s Diversified Premium Fund. 

The firm said IXTHYS will be managed separately from SunTx’s sponsored private equity funds, with SunTx’s founding partners having already made initial capital contributions.  Ned Fleming, founder and managing partner of SunTx, announced the formation of IXTHYS Premium Alpha Fund. 

Fleming noted that IXTHYS is an absolute return strategy intended to generate long-term equity-like returns with lessened volatility of those returns to the investor. IXTHYS provides investors with a quarterly liquidity provision, an “added benefit to family offices,” the firm said. 

“The core investment vehicle – and it’s an arbitrage trading strategy so we’re not investing in stocks or shorting stocks – is the S&P 500 Cash Index and the listed derivatives on that index for an average duration of seven days. Since there’s this natural arbitrage, or a natural inefficiency in those instruments, we want to do that same trade 50 times a year, on average,” Dodson told this publication.

He explained: “Entering the transaction, the trade is delta neutral. We are unconcerned with the direction of the market – we’re concerned with the magnitude of the moves over the next seven to 21 days. When you have a statistical advantage, you want to play as many games as possible. This relationship exists across asset structures, but the reason we use the S&P 500 Cash Index and the derivatives thereon is because of the liquidity.” 

SunTx Capital Partners is a Dallas-based private equity firm that invests in middle-market manufacturing, distribution and service companies. It was founded in 2001 and currently has over $600 million in assets under management.