First Albany, New York
One corporate bond manager at a high-profile New York shop makes clear that he has little concern for the size of Grady's shop relative to his competitors at larger underwriters. He says "Grady gets hard-to-find bonds at very fair prices." More importantly to this account, Grady is an important source of idea generation, with "a 90% hit rate." He cites his recommendations to purchase Markel Insurance at 400 basis points over the curve (they are now at 160) and "turnaround story" Farmers Exchange at 500 basis points over the curve, which is now trading near 300 over.
J.P. Morgan Securities, New York
A Connecticut hedge fund manager says that Selver manages the tension between pushing new issues and supporting existing issues in the secondary market "better than any coverage out there." This hedger terms Selver "an excellent idea generator, who has a keen sense of the markets, helping him comb over the issues that many dealers aren't supporting for valuable ideas."
Examples of Selver's recommendations to this nearly $3 billion in assets account include buying the BF Goodrich 7.625%s of '12 during the spring at 315 over Treasuries; they are now at 135 over. The manager also points to Selver's sponsorship of the MHS 7.25% of '13 bonds, which were sold at 315 over the curve, and broke syndicate at 285 over. He insisted that the client keep his money "on the table" rather than take profits, which can be said to have worked well, as they are now at 215 off the curve.
FTN Financial, New York
An investor at a self-described "smaller money manager," says "Jim works extra-hard to be cognizant of our diverse [corporate bond] trading needs and portfolio holdings." This manager describes McHugh's true value to his portfolio as "being able to spot troubled, or potentially troubled, credits and get us out of them with a minimum of pain." He makes clear that "this takes a lot of work on his part" and he attributes some of his funds "top-of-the class" 10-year performance record to problems they have avoided, due to McHugh's watchfulness. He adds to this by noting that "Jim has covered us for 10 years and has always provided us with insight and dealt with us candidly, which really sets him apart during the various credit market problems over the past several years."
The manager points to McHugh's "table pounding on the Union Carbide '09s" about two years ago as typical of his ability to spot trouble. "He saw that a lot of people had very real concerns about their asbestos litigation problems and would be heading for the door soon," he says. The investor says that McHugh took them out of the bonds "around 98-par," happily noting that the bonds are now bid in the upper 80s.