Investment Strategies That Work In Highly Volatile Markets with David Sherman

Investing takes many forms. For most people, it is a way to grow their money and protect their financial future. This means that they are more likely to invest in things they are comfortable with and believe will give them the best return on investment. But when it comes to diversification, what are the best strategies?
In today’s episode, Rusty talks with David Sherman, President of Cohanzick Management and Founder & Portfolio Manager of CrossingBridge Advisors, an investment management firm specializing in ultra-short and low duration strategies, including special purpose acquisition companies (SPACs).
David talks with Rusty about the current market environment, particularly the high yield bond market, what investors should know about SPACs, and what the true risk-free investment rate is.

Key Takeaways

[01:54] - David’s role at CrossingBridge Advisors.

[04:27] - What makes David’s Global Value Investing class interesting.

[07:14] - What distinguishes his students from one another.

[09:15] - What qualifications David seeks in an analyst.

[12:07] - How the current market conditions affect the global economy.

[15:40] - Factors that influence David's investment decisions.

[20:12] - His perspective on high yield as an asset class.

[24:03] - How he manages the tail risk of high yield assets.

[28:07] - Are high yield bonds a good inflation hedge? 

[30:19] - What investors need to know about investment grade bonds.

[31:38] - SPACs: What they are and why investors and financial advisors should care.

[40:03] - How investors are allocating to SPACs.

[45:44] - What the true risk-free rate is for most investors.

[48:04] - The qualifications of a good portfolio manager.

[53:44] - How David personally invests his money.

[56:46] - What David does to maintain his mental and physical health.

Quotes
[20:58] - "I think people have a core belief, a DNA of what makes them comfortable. And they only invest the best when they do things they are comfortable with. When you're not making money on things you're not comfortable with, it's just not a good psychological environment." - David Sherman
[25:44] - "Most high yield doesn't have a long tail risk. Most high yield is five years or less in maturity. You can say that's a lot of tail risk but that's not nearly what it used to be. A lot of high yield and leveraged loans have certain covenants like change of control provisions if a company gets acquired which investment grade bonds don't, typically." - David Sherman
[52:47] - “People underperform and outperform at various times depending on the economic environment or on the product cycle. And certain products are more opportunistic at certain times. There are a lot of good distressed investors, there’s just not a lot of good product right now. I would much rather have a mediocre distressed investor with a lot of product that's cheap, who's disciplined, than a great distressed investor who's clever by half who is a little less disciplined and there's not enough product." - David Sherman

Links 

David Sherman on LinkedIn

David Sherman Email

Don’t Let Me Misunderstood by The Animals

CrossingBridge Advisors

CrossingBridge Fund Overview

Cohanzick Management

Orion Advisor Solutions

Leucadia National Corporation (now Jefferies Financial Group)

Washington University in St. Louis

The Predators' Ball by Connie Bruck

Michael Milken

James B. Rosenwald III

Freddie Mac

Brinker Capital

Live Oak Acquisition Corp

RMG Acquisition Corp

SPAC Informer

SPAX

Ken Griffin

Seth Klarman

CrossingBridge Pre-Merger SPAC ETF

Connect with our hosts

Rusty Vanneman

Robyn Murray

Subscribe and stay in touch

Apple Podcasts

Spotify

Google Podcasts

0540-OPS-3/29/2022

Investing takes many forms. For most people, it is a way to grow their money and protect their financial future. This means that they are more likely to invest in things they are comfortable with and believe will give them the best return on investment. But when it comes to diversification, what are the best strategies?

In today’s episode, Rusty talks with David Sherman, President of Cohanzick Management and Founder & Portfolio Manager of CrossingBridge Advisors, an investment management firm specializing in ultra-short and low duration strategies, including special purpose acquisition companies (SPACs).

David talks with Rusty about the current market environment, particularly the high yield bond market, what investors should know about SPACs, and what the true risk-free investment rate is.

Key Takeaways

[01:54] - David’s role at CrossingBridge Advisors.
[04:27] - What makes David’s Global Value Investing class interesting.
[07:14] - What distinguishes his students from one another.
[09:15] - What qualifications David seeks in an analyst.
[12:07] - How the current market conditions affect the global economy.
[15:40] - Factors that influence David's investment decisions.
[20:12] - His perspective on high yield as an asset class.
[24:03] - How he manages the tail risk of high yield assets.
[28:07] - Are high yield bonds a good inflation hedge? 
[30:19] - What investors need to know about investment grade bonds.
[31:38] - SPACs: What they are and why investors and financial advisors should care.
[40:03] - How investors are allocating to SPACs.
[45:44] - What the true risk-free rate is for most investors.
[48:04] - The qualifications of a good portfolio manager.
[53:44] - How David personally invests his money.
[56:46] - What David does to maintain his mental and physical health.

Quotes

[20:58] - "I think people have a core belief, a DNA of what makes them comfortable. And they only invest the best when they do things they are comfortable with. When you're not making money on things you're not comfortable with, it's just not a good psychological environment." - David Sherman

[25:44] - "Most high yield doesn't have a long tail risk. Most high yield is five years or less in maturity. You can say that's a lot of tail risk but that's not nearly what it used to be. A lot of high yield and leveraged loans have certain covenants like change of control provisions if a company gets acquired which investment grade bonds don't, typically." - David Sherman

[52:47] - “People underperform and outperform at various times depending on the economic environment or on the product cycle. And certain products are more opportunistic at certain times. There are a lot of good distressed investors, there’s just not a lot of good product right now. I would much rather have a mediocre distressed investor with a lot of product that's cheap, who's disciplined, than a great distressed investor who's clever by half who is a little less disciplined and there's not enough product." - David Sherman

Links 

David Sherman on LinkedIn
David Sherman Email
Don’t Let Me Misunderstood by The Animals
CrossingBridge Advisors
CrossingBridge Fund Overview
Cohanzick Management
Orion Advisor Solutions
Leucadia National Corporation (now Jefferies Financial Group)
Washington University in St. Louis
The Predators' Ball by Connie Bruck
Michael Milken
James B. Rosenwald III
Freddie Mac
Brinker Capital
Live Oak Acquisition Corp
RMG Acquisition Corp
SPAC Informer
SPAX
Ken Griffin
Seth Klarman
CrossingBridge Pre-Merger SPAC ETF

Connect with our hosts

Rusty Vanneman
Robyn Murray

Subscribe and stay in touch

Apple Podcasts
Spotify
Google Podcasts

0540-OPS-3/29/2022