Team Highlights

The investment team is dedicated to deep fundamental credit research which serves as a foundation to the team’s high conviction investment process.

• Mr. Krug is supported by senior analysts, a data scientist, dedicated fixed income traders and a Chief Operating Officer.
• The investment team is located in Denver.

Investment Process

The team seeks to generate appealing risk-adjusted returns by investing across the capital structure and by taking advantage of the illiquidity premium and asymmetric risk profile in credit investments.  The team’s research process has four primary pillars:

Business Quality
The team uses a variety of sources to understand an issuer’s business model resiliency. It analyzes the general health of the industry in which an issuer operates, the issuer’s competitive position, the dynamics of industry participants and the decision-making history of the issuer’s management.

Financial Strength and Flexibility
The team believes that analyzing the history and trend of free cash flow generation is critical to understanding an issuer’s financial health. The team’s financial analysis also considers an issuer’s capital structure, refinancing options, financial covenants, amortization schedules and overall financial transparency.

Downside Analysis
The team believes that credit instruments by their nature have an asymmetric risk profile. For long positions, the risk of loss is often greater than the potential for gain, particularly for below-investment grade issuers. The team seeks to mitigate this risk with what it believes to be conservative financial projections that account for industry position, competitive dynamics and positioning within the capital structure. In the team’s long/short strategy, a negative view of such fundamentals may result in the team establishing a short position, seeking to capture expected value destruction or capitalize on inherent asymmetry.

Value Identification
The team uses multiple metrics to determine the value of an investment opportunity. It looks for credit improvement potential in its long-only strategy and potential for improvement or deterioration in its long/short strategy, relative value within an issuer’s capital structure, catalysts for business improvement and potential value stemming from market or industry dislocations.

In-depth Investment Process

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