Short duration investments are primarily characterized by the ability to realize full liquidity in the investments within ~2 years. As a result, we focus on event-driven opportunities in the public markets where the “event” is expected to occur within our time frame as well as private debt and structured securities maturing within 2 years. We value certainty of return of principal and willingly exchange higher expected returns for downside protection. As a result of the short duration nature of the investments and the premium placed on return of principal, our return expectations are more comparable to niche debt investors than those typically required by equity investors.
Liquidating Publicly Traded Company
Acquired stock at a discount to expected liquidation value; substantial cash balance relative to purchase price and considerable net operating loss carry-forwards
Pool of "Pre-Prime" Consumer Loans
Participated alongside other private investors in a credit facility to a special purpose vehicle that owned a discrete pool of short-term consumer loans; protected structure and rapid principal repayment
Bonds in Bankrupt Casino Operator
Participated alongside pre-petition bond holders in DIP financing as well as high-coupon exit financing bonds issued at a discount; improving operating performance and clear path to refinancing
Short-Term Financing for Education Services Company
Provided flexible short-term debt solution to facilitate growth in exchange for rapid principal repayment and warrants in the company; funds used to capitalize on ramping growth opportunities
Long duration investments span a variety of structures and asset classes including private equity and mezzanine debt, structured finance and other special situations. Our flexibility allows us to provide financing in transactions that are often outside of the mandate of asset managers in traditional asset classes. We focus on opportunities where the underlying assets are cash-flow generative or have strong collateral support. In our typical transaction there is a quantifiable downside scenario, a clear path to return of our principal and an opportunity to realize outsized returns in residual or option value. Because of anticipated hold periods in excess of 2 years, our return expectations are consistent with those expected by equity investors.
Rapidly Growing Provider of Consumer Loan Software
Structured equity position with senior debt and warrants coupled with common stock; cash flow prior to debt maturity covers cost of equity investment
Liquidating Asset-Based Hedge Fund
Limited partnership interest in fund purchased at a discount to net asset value; fund in process of liquidating and distributing cash proceeds to investors from its oil & gas and other non-correlated assets
Recapitalized Regional Bank
Equity position alongside private investors and management team using the bank as a growth platform to take advantage of the opportunity to purchase discounted loans from less well-capitalized institutions
Aircraft Engine Securitization
Equity interest in a niche securitization acquired in the secondary market at a discount; equity entitled to preferred dividend stream as well as residual value
We invest in a broad selection of asset classes often filling gaps in the traditional financing and banking communities. Our typical investment is between $1 million and $15 million. We favor self-liquidating investments and opportunities where we have the ability to recapture principal rapidly while maintaining a participation in future value creation. In most circumstances we invest alongside a partner that shares our investing philosophy and assists us by playing an active role in managing the investment. As a partner, we distinguish ourselves by our ability to deconstruct complex situations, our quick decision making capabilities and our flexible capital pool.
We are particularly attracted to opportunities that allow us to partner with like-minded investors through initial transactions that can be grown into scalable businesses. To that end we actively seek out partners with expertise in particular investment strategies with whom we can build out larger relationships over time. Frequently we play a formative role in the businesses of our partners by providing capital for their initial transactions as independent entities. We have supported a number of emerging fund managers in this way.