This segment of the market is extremely inefficient due to a lack of third party research, stale or biased credit ratings, and smaller issue sizes which preclude the larger institutions and ETFS from participating
Greenwich, CT (PRWEB) May 17, 2013
Brian Connolly of Millstreet Capital Management headlined the Ivy Family Office Greenwich, CT Mid Year Outlook Forum with a discussion on “Finding Yield in a ZIRP Environment.” The Forum was held on May 14th in Greenwich, CT.
According to Mr. Connolly, “We do not find the overall high yield market to be attractive with yields at 5% and spreads at a post-financial crisis low. These levels have been driven by central bank liquidity and there is a tremendous amount of interest rate risk in the high yield market right now. Despite our view of high yield, we remain very excited about our portfolio here at Millstreet which we view as a total return product capitalizing on the unexploited small-to-mid cap niche of high yield.”
Moreover, “At Millstreet, we see tremendous opportunity in this small-to-mid cap segment of the high yield market. Our fixed income portfolio yields more than twice the overall high yield market even though our credits are about 1.5 turns less levered. In addition to the compelling risk/reward, our duration stands at only 2 years compared to 5 years for the high yield market and our current income is meaningful with more than a double digit coupon on average. We find these opportunities because this segment of the market is extremely inefficient due to a lack of third party research from Wall Street, credit ratings which often times are stale and biased against smaller companies, and smaller issue sizes which preclude the larger institutions and ETFs, which have come to dominate the High Yield market, from investing in this part of the market. In a yield-starved world, our niche of the high yield market clearly stands out as attractive.”
Other speakers on the panel included: Mike Devlin of Ceres Partners, John Sadowski of G2 Investments and Azhar Quader of Queens Court Capital.
Brian Connolly is a co-founder and portfolio manager at Millstreet Capital Management LLC.
Prior to co-founding Millstreet, Brian worked at Regiment Capital Advisors, a Harvard Management Company spinout, where he managed sector portfolios for the various Regiment funds that included long and short positions, capital structure arbitrage trades, and special situation strategies. He also represented Regiment on steering committees where he played an active role in distressed investments.
Prior to joining Regiment Capital, Brian spent five years as a high yield research analyst at Fidelity Investments. At Fidelity, he followed several sectors and was part of the high yield group during the launches of Fidelity’s bank loan and leveraged company stock funds. Brian also has experience working in the health care group for investment bank Alex Brown & Sons and as an associate for the private equity firm Madison Dearborn Partners. Brian graduated from Harvard University with an A.B. in American history and has a master’s degree in business administration from the Massachusetts Institute of Technology Sloan School of Management.
The Ivy Family Office Network Forum provides an ongoing dialogue for family offices to support high-value education and information on trends for family office investing, structure and operational excellence. Attendees gain practical strategies and solutions to achieve both short and long-term objectives. The program features off-the-record, peer-to-peer discussions in a non-commercial setting, in-depth and highly interactive sessions.
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For more information on Millstreet Capital contact Becky Vail at bvail(at)millstreetcapital(dot)com.