Leveraging credit, equity, and derivatives expertise, Panthera seeks relative value across the capital structure. We then focus on combining these relative value opportunities with trade structures designed to generate convexity (where the risk/return profile is asymmetric).
Capital Structure Arbitrage Background
Panthera targets over and undervalued opportunities across the capital structure to generate an optimal risk/return profile. By focusing on a targeted universe of companies capitalized with both debt and equity, Panthera leverages its domain knowledge in this focus group across multiple securities/asset classes. This is designed to provide an elevated level of readiness to “pounce” on relative value opportunities, as and when they present themselves. We then seek to combine our fundamental relative value focus with convexity structures to enable favorable risk/reward profiles.
Risks & Disclaimers
Key Strategies
Convertibles
Convertibles feature convexity (more upside participation of the underlying equity than downside participation). With a focus on balanced structures, growth sectors, smaller (less efficient) capitalizations, when combined with a track record of exceptional security selection, PC expects to further enhance the payoff profile of converts with even better downside protection and higher upside participation. Beyond capturing asymmetric returns from the underlying stock, converts typically perform well in rising interest rates environments while often outperforming in higher volatility conditions. PC has identified strategies to capture inherent inefficiencies in the industry that arise from inflexible mandates to which other managers must adhere. PC will leverage all available strategies to optimize return per unit of risk, including convertible arbitrage (hedging equity exposure).
Equity Long/Short
PC’s equity long/short strategy focuses on long positions in levered growth equities where elevated revenue and free cash flow growth is expected to reduce cost of capital and, when combined with attractive execution risk relative to expectations, drive attractive long-term equity returns. In addition to fundamentally rooted security selections, PC has also developed various proprietary event driven strategies designed to minimize market exposure while driving attractive asymmetry through options. Rounding out our holdings, we curate leading closed-end funds with demonstrable success driving attractive risk-adjusted returns and select factor based ETFs to capture secular growth themes.
High Yield
PC’s high yield strategy includes corporate straight debt, allowing us to provide a fixed income allocation, while also creating synthetic asymmetry by selectively combining with equities (both long and short) and options to enhance return per unit of risk.
Portfolio Management
In addition to asymmetric trade structures, we risk manage through standard portfolio management practices including security and issuer concentration limits. We also diversify through both direct security holdings and unaffiliated funds (e.g., Exchange Traded Funds ), which enables target sector weightings outside of our core industries of focus. We further target desired portfolio exposures by encouraging clients to combine strategies.