The following strategies are fund and/or investment professional specific.

Positioning within our long/short equity strategy begins with a macro view on our desired net market exposure (net long, net short or market neutral). From this starting point, “bottom up” fundamental research will drive our stock selection. We are looking for securities that are mis-priced, either over-valued or under-valued, based on our outlook for that particular industry or sector. In addition to detailed valuations, based on various criteria, we are also looking for a catalyst, which will change the outlook for that security within a defined time frame. Our positions are sized based on our assessment of the ratio of risk to potential reward. We examine relative pricing within sectors as well as correlations across sectors to assess risk and understand opportunities to hedge our long or short investments. We mitigate risk or hedge exposure through short sales of stocks or exchange-traded funds as well as positions in relevant commodity futures or indices.

This process begins with a constant screening of the convertible bond and corporate bond universe in order to identify securities that are mis-priced or undervalued relative to their underlying equities. The process involves examining company and industry fundamentals to identify future impacts on various aspects of the bond. The number of shares sold short depends on the market exposure we want, and will be determined by yield curve shifts, dividend yields, as well as the pricing and volatility of the stock.

Often our fundamental stock selection will take into consideration a potential takeover or merger situation. When a deal is announced, we research it thoroughly in order to reduce the uncertainty around possible outcomes. Before taking a position we will weigh public documents, analyst reports and conversations with company officials. If the rewards outweigh the risks, we may take a position, which we may add to if the outcome becomes more certain. We will liquidate our position if the risk/reward relationship deteriorates or if the deal is consummated.  

We are constantly researching the market place for investing opportunities driven by catalyst events or special situations, including such events as mergers, hostile takeovers, reorganizations, or leveraged buyouts. We are particularly interested in event driven situations where we may have a competitive advantage due to our fundamental background or research in one of our core industries. 

We are active traders across equity markets with significant activity in the trading flow in our core sectors. This enables us to take advantage of investment opportunities that arise from events such as initial public offerings (IPO’s), sudden price changes caused by events such as an interim earnings disappointment, a news release that impacts the market such as a mineral discovery, hostile bids, or market disruptions caused by large blocks or other trading anomalies.

This strategy uses a systematic approach to extract returns from a broad array of liquid global markets including currency, fixed income, equity, energy, agricultural and metals markets. Both trend following and counter trend strategies are used. This type of strategy tends to have to the lowest correlation to traditional assets.

Distressed investing involves the investment in the securities of companies experiencing significant financial distress either due to a sub-optimal capital structure or a deteriorating fundamental outlook. This strategy will involve a long or short investment in either equity and/or debt that the investment manager deems as overvalued or undervalued. The focus will be on those companies that are in or near bankruptcy or whose securities are trading as if bankruptcy is a probable scenario. The investment manager will utilize fundamental analysis including credit recovery analysis in the determination of the expected future value of the securities invested. A typical distressed debt investment would involve the purchase of the senior bonds of a bankrupt company with the anticipation of either owning a package of post bankruptcy newco debt, and/or equity and warrants such that the expected return on capital employed is sufficient in the investment manager’s discretion. Additionally, distressed securities may be sold short in those situations where a company’s securities have been deemed overvalued and the risk adjusted expected return on capital from being short is attractive.

Capital structure arbitrage investing involves the analysis of a single company’s capital structure to determine if there are any relative mis-pricings among different layers. The investment manager will utilize an eclectic approach which includes fundamental, credit, prospectus/indenture, and trading flows analyses. Typically, the process would involve the purchase of the layer or layers of the capital structure that the investment manager deems as relatively undervalued and to simultaneously sell short those securities that are deemed relatively overvalued. The ratio of the hedged portion of the investment will be determined using scenario analysis and the resulting expected returns for each security being analyzed in order to determine the optimal hedge. The investment manager will consider and analyze all parts of the capital structure including loans, senior debt, subordinated debt, secured debt, convertible debt, preferred shares, equity, warrants as well as other related derivative securities.

This strategy is a blend of all of the above strategies. The investment approach is diversified by employing various strategies simultaneously to realize short and long term gains. This style of investing allows the manager to overweight or underweight different strategies to best capitalize on current investment opportunities.