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| Leon Wagner |
GoldenTree Asset Management is exploring new strategies as the New York-based manager deals with a low volatility market and too much capital chasing assets. In an opening gambit, GoldenTree is planning to exit the long only separate account business and is returning $1.2 billion to investors. The firm is also opening an office in London to take advantage of relative-value plays, is considering starting a multi-strategy credit fund to incorporate all of its businesses and has started a real-estate investment arm. "Our problem isn't raising assets; it's deploying assets," said Leon Wagner, chairman, explaining that the firm is broadening its investment spectrum. The accounts being liquidated are only high-yield and the bank loan portfolios will be unaffected. This is part of a broader strategy to focus on absolute total return investing and exit the long-only separate accounts business, according to Wagner.
GoldenTree currently has more than $6.5 billion in total assets under management and will maintain $3 billion in its existing debt opportunities absolute return business, which includes high-yield bonds, distressed debt and bank loans. While spreads continue to be tight in bank debt, being at the top of the capital structure and the floating-rate nature of loans means it is still not a bad place to invest, he said.
Wagner said the firm plans to liquidate accounts benchmarked against a variety of indices, including ones from Credit Suisse First Boston and Merrill Lynch, during the next 90 days. With low volatility and too much capital, GoldenTree wants more options. "We think high yield is richly priced and capacity constrained. It is incumbent to be able to use all of the tools [at a manager's disposal] such as the ability to short, use leverage and invest in non-index securities," stated Wagner. He noted that GoldenTree has been defensive on high yield for some time and while the credit environment is benign, he expects volatility will likely return at some point.
Additionally, GoldenTree is planning to open an office in London to better equip itself to take advantage of relative value plays when they arise in European assets. "Europe is very rich as well, but we have come to the conclusion that we want to be on the ground to take advantage of opportunities," said Wagner. He declined to elaborate on what shape the firm's European investments will take, noting that these expansion plans are still in a preliminary stage.
The firm has also launched GoldenTree InSite Real Estate Partners, which will be looking to invest in real estate transactions through both direct and indirect equity investments, including illiquid real estate partnerships.
