Persuade me or prove to me that I am mistaken in thought or deed, and I will gladly change – for it is the truth I seek, and the truth never harmed anyone. Harm comes from persisting in error and clinging to ignorance. ~Marcus Aurelius
We focus primarily on stressed/distressed opportunities within corporate and sovereign credits as well as select event-driven opportunities. Our objective is to manage a highly idiosyncratic, moderately concentrated portfolio that generates attractive risk-adjusted returns with low beta, while preserving capital.
What distinguishes Aurelius from other distressed managers is that we skew our portfolio to emphasize non-economically sensitive value-drivers (corporate structure, capital structure, and legal issues) over economically sensitive value drivers. While positions are selected, sized and hedged to effectuate this skew in the portfolio as a whole, our positions individually will run the gamut between primarily business bets and pure structural/legal bets.
Our emphasis on structural and legal factors provides two important benefits. First, we have an edge in this area that is second to none and that often generates contrarian insights missed by the market. Second, structural and legal factors are not market-correlative, hence they facilitate our ability to maintain very low beta.
The foundation of our process is deep fundamental bottoms-up research of all material factors – both economically and non-economically sensitive – relevant to risks and benefits of each investment opportunity. For each credit, we assign a coverage team typically consisting of a senior investment professional and an analyst. That coverage team takes ownership over all aspects of the analysis as well as any activism attendant to the investment. Our CIO is “hands on” and regularly interacts with each coverage team as their research progresses as well as over the life of any resulting investment.
We are interventionist investors directly participating in the event-stream. Activism can create proprietary value and mitigate risk. We are frequently “at the table,” which facilitates new money opportunities with superior economic terms. We prefer to resolve disputes consensually; but we will tenaciously enforce the Aurelius funds’ rights if a reasonable compromise cannot be reached. We are commercial, but we will not be intimidated or ignored.
We conduct ourselves with the utmost integrity and probity. We do not skate close to the edge. We have a healthy respect for the value of being beyond reproach.