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Structured Products -Cash flow high yield bond CBOs -Market value high yield bond CBOs Institutional Accounts |
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-Mid single-B mandate -Crossover with high double-B average rating -Treasury Plus - 250bps, 350bps, 450bps -Customized portfolios to client directives
Our philosophy is to position client portfolios to prosper through economic and capital market cycles by performing extensive fundamental credit research while maintaining adequate levels of diversification by industry and issuer. Our overriding philosophy is to overweight defensive issuers in investor portfolios.
High yield market fundamentals and technicals are important considerations for investors. Fundamentals, such as default expectations and issuer quality, tend to change over time. In bull markets, default expectations are low and issuer quality often declines. The opposite is the case in bear markets. Technicals, such as flows into mutual funds, CDOs and the new issue market, tend to run in lockstep with the new issue calendar and build when high yield investors are awash in cash. Maintaining credit discipline in bull markets is critical and having cash available for investment in bear markets can drive long term performance.
We are cash flow investors. The primary source of repayment on a bond comes from cash generated by an issuer’s operations. The secondary form of repayment is funds from the capital markets, which over time may or may not be available. The tertiary form of repayment on a bond is from the issuer's asset sales. It is our experience that issuers are often forced to sell assets into buyers’ markets. It is our view, therefore, that the most attractive bonds are issued by companies that generate strong, predictable, and growing cash flow. |
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| ©2002 Stonegate Capital Management, L.L.C. | ||||
