Why does GoldenTree see value there and what type of stressed assets does the firm favor?
We firmly believe it is very difficult to outperform if all you are doing is buying par or new issue loans. It’s an old axiom that there is little upside with par loans and an asymmetric degree of downside, and that particular risk reward equation makes it very difficult for a par-loan based manger to truly outperform. We try to develop loan vehicles that allow us to achieve a total return with part of the deal anchored with 70% par loans, while the remaining 30% affords us the flexibility to invest in stressed and distressed types of assets. If you pick and choose your investments carefully in that sector you have a much more favorable risk reward equation. If you buy something at 70 that you believe is undervalued, you can have 30 points of potential upside with maybe 20 points of downside. It’s a much more favorable equation than a par loan where you have maybe one percent of upside and perhaps , 60, 70 percent of downside at times. When we are talking about truly distressed situati
Related Questions
- I know that I can inject time delay but when I type WAITFOR DELAY :0:5, I get a result after about two/three/four/… times later than my value set in the delay. Whats wrong?
- Why does GoldenTree see value there and what type of stressed assets does the firm favor?
- Type of value to be estimated. Value-in-Use, or Value-in-Exchange?
