Bramshill has a close relationship with Duff & Phelps, an outside business and regulatory consulting firm, which provides Bramshill with ongoing support related to the administration and enhancement of the firm’s compliance program. Sean Wilke, an attorney and director at Duff & Phelps, has worked with Bramshill since before its 2012 inception and also previously served as the firm’s in-house general counsel and chief compliance officer.
Dean Somes is a graduate of Boston College, earning dual B.A. degrees, and a published author, having written chapters in two books entitled, Your Options Handbook (Wiley, 2011), by Jared Levy and What’s Behind the Numbers? (McGraw-Hill, 2012), by John DelVecchio and Tom Jacobs, which was awarded the 2013 Book of the Year by Stock Trader’s Almanac.
Malcolm has 46 years of experience in the securities industry. Malcolm joined Bramshill in 2014. Malcolm was most recently a Managing Director at JP Morgan for 18 years in Equity Sales where he sold all equity, equity derivatives, swaps and other cross products to large institutional clients worldwide. Malcolm’s prior experience was as a Director at Salomon Brothers (later Citigroup) for 21 years where he was responsible for equity sales and trading. Malcolm is a graduate of Bryant College (B.S.).
Mr. Pines is a Portfolio Manager at Bramshill Investments where he co-manages their flagship Income Performance Strategy with Bramshill’s CIO. Prior to joining Bramshill Investments in 2012, Mr. Pines spent 10+ years as a Proprietary Trader and Portfolio Manager leading a multi-asset class strategy which specialized in quantitative modeling techniques and utilized fundamental research to determine relative value. The bulk of that time was with Assent (Sungard Financial) and more recently Chimera Securities. He also spent a year with Accenture in their Core Trading Services Group. He holds a Masters Graduate Certificate in Algorithmic Trading from Stevens University. Mr. Pines graduated cum laude with a B.S. in finance from Georgetown University.
Mr. Leschen is an Associate Director at Bramshill Investments. Before joining Bramshill in 2013, he worked at the Institute for International Research where he lead sales and marketing campaigns directed towards private and institutional investors. In addition he lead programs to research best practices in hedge fund operations, compliance, and client servicing. Mr. Leschen is a graduate from the University of Delaware and holds a Claritas Investment Certification from the CFA Institute.
Steven Carhart is a veteran investment and research professional with extensive portfolio management experience. Steve’s previous investment experience included three years as Vice President and portfolio manager of a major mutual fund at Pioneer Investment Management and five years as Vice President and portfolio manager of the Baker Fentress closed end mutual fund. In earlier stages of his investment career, he managed equity and balanced portfolios at the Northern Trust Company as well as founding the investment research firm Carhart Associates Inc. Steve is a graduate of the Massachusetts Institute of Technology with an SB in Electrical Engineering. He also earned an SM from the Program for the Social Application of Technology in the Sloan School of Management at MIT. He is a Chartered Financial Analyst, and a member of the CFA Institute and the Boston Society of Security Analysts.
Before joining Bramshill Investments in 2014, Mr. Byrnes worked for SAC Capital for 8 years where he co-ran an equity portfolio focused on the Energy, Power and Utility sectors for one of the largest portfolio managers at the firm. Prior to that, Mr. Byrnes was an analyst at CJS Securities. Mr. Byrnes is a graduate of Vanderbilt University.
Mr. Forns (CPA, CGMA) has more than 35 years of experience as both a CPA and a CFO. Mr. Forns joined Bramshill in November 2012. A former partner at J.H. Cohn, LLP (now CohnReznick), Mr. Forns was associated with the firm from 1971-1995 and again from 2006-2012. Mr. Forns was the CFO of Pezrow Companies, Inc. from 2000-2004 and was instrumental in the Companies sale to Advantage Sales & Marketing in 2004 when he became Regional Director of Finance. Prior to Pezrow, Mr. Forns was CFO of Barry Callebaut USA from 1998-2000 which acquired his previous company, Van Leer Corporation where he was also the CFO from 1997-1998. Mr. Forns holds a MBA in Accounting & Taxation from Fairleigh Dickinson University and BBA in Accounting from Siena College.
Mr. Nieporte is the Chief Operating Officer of Bramshill Investments. Before starting Bramshill in June of 2012, Mr. Nieporte was an Early Stage Founder and the Senior Director of Sales and Operations for Accept Software (Acquired by Artemis 2012) from 2003. Prior to Accept, he was Vice President of Business Development and Operations for CCG Consulting for three years. Prior to CCG, he was the Director of Business Development and Operations for Net TV / Lumenati a Pequot Company for two years. Mr. Nieporte has a B.S. in finance and economics from St. Mary’s College.
Mr. Selver is the Chief Executive Officer of Bramshill Investments. Mr. Selver joined Bramshill in 2014. Mr. Selver was previously a Managing Director at BankAmerica Merrill Lynch, Inc. in High Yield Sales where he covered many large institutional asset managers. Before joining BankAmerica, Mr. Selver spent 14 years at JPMorgan as a Director, selling various credit products to funds including loans, bonds, credit derivatives and CDO’s. Prior to JPMorgan, Mr. Selver was an attorney at Squire, Sanders and Dempsey where he specialized in corporate finance and public finance. Mr. Selver is a graduate of Albany Law School and Holy Cross College. Mr. Selver serves on the Board of Directors of the Center for Food Action in Englewood, NJ.
Mr. DeGaetano is the Chief Investment Officer and Founder of Bramshill Investments. Prior to founding Bramshill, in 2012, Mr. DeGaetano was a Senior Portfolio Manager at GLG Partners LP where he not only managed the predecessor to the Bramshill Income Performance Strategy, but also managed a levered US credit portfolio for the GLG Market Neutral Fund. Combined Mr. DeGaetano had approximately $375million in assets under management for GLG Partners LP. Prior to GLG Partners in 2007, Mr. DeGaetano was a Managing Director and Head of US Credit Trading at RBS Greenwich Capital from 2005 through 2006. He traded and oversaw the credit trading desk, comprised of 14 traders across corporate bonds, credit default swaps and index products from investment grade to high yield averaging a $4 billion gross position. Prior to RBS Greenwich Capital, he traded credit for 12 years for Bear Stearns & Co. Inc. He was a Senior Managing Director and the Head Trader on the high yield trading desk from 2000 through 2004. He managed a group of 4 traders along with trading his own positions during this period overseeing a gross position of approximately $1billion. His expertise has been in high beta sectors such as telecom, utilities, and special situations. Prior to trading high yield, he was a Managing Director on the investment grade trading desk at Bear Sterns from 1992 through 1999. Mr. DeGaetano has a B.A. from Colgate University.
Art is a member of the Columbus Citizens Foundation and actively supports student-athlete programs and scholarships through a family foundation.
Absolute return fixed income specialist recognized by HFMWeek in multiple categoriesHackensack, NJ (October 19, 2016) – The Income Performance Strategy from Bramshill Investments has been nominated for three awards from HFMWeek’s US Hedge Fund Performance Awards 2016. The nominations are in the following three categories: Credit under $1 billion, Fixed Income under $1 billion, and Specialist.
How quality is your yield? Will that yield be protected from the risks lurking in today’s fixed income market? These are just some of the questions and challenges facing RIAs and investors globally. At Bramshill Investments, we manage absolute return solutions in fixed income and income producing assets with a focus on five distinct asset classes (investment grade and high-yield bonds, preferreds, municipal bonds, and U.S. Treasuries). We understand the challenges RIAs are facing in their search for yield; as portfolio managers, we are facing them as well. Hopefully, you will find our cautionary considerations related to credit risk useful as you re-evaluate your fixed income allocations.Lately, credit risk seems to be irrelevant to RIAs and investors. Macro influences, courtesy of the central banks, have created an environment of complacency – especially when it comes to credit quality. The passive investor doesn’t appear to care about good or bad fundamentals…they own everything. Actively managed bond mutual funds have routinely allocated to the riskiest securities in an all-out scramble to beef up their advertised yield with hopes of attracting inflows from yield-starved investors. Together, the flows into yield-enhancing strategies have been massive. However, with complacency, comes risk.A few things to consider…
- As companies issue debt, is the rationale behind the issuance the “right” reason?
- Since 2009, U.S. corporations have issued almost $3 trillion in debt (roughly equal to the debt issuance of the last 50 years)…much of this went to buybacks, dividends and M&A.
- While this is good for equity investors, it is NOT good for bond investors who would much rather see the capital being used for long-term productive purposes not as a short-term reward for equity holders.
- Are we at the late stages of the economic cycle?
- Economic downturns and equity market sell-offs often coincide with increased default rates, and as investors know, high yield and speculative grade securities tend to be more highly correlated with equity prices than higher quality bonds.
- Taking undue credit risk in attempt to capture enhanced yield could lead to increased drawdowns and an unexpected loss of capital as we move through the economic cycle.
- Where are we in the debt cycle?
- Debt cycles (and especially the debt super-cycle of the last 30+ years) tend to mask credit risk. Currently, per S&P Ratings, the average credit rating of U.S. corporations is BB – … yes, this means that the average U.S. corporation is a highly speculative investment.
- With corporate revenues weak and interest coverage ratios declining, default risk appears to be increasing in a meaningful way.
To be clear, we are not advising investors to completely avoid credit risk. Instead, we are recommending caution…don’t overweight yield relative to risk. Invest for value. Sometimes this means forgoing that attractive advertised yield for a higher quality total return. Protecting capital and ultimately protecting future income is becoming paramount, and at some point, credit analysis will matter again as investors will be rewarded for differentiating between credit fundamentals.
We understand that RIAs are facing these same challenges yet with even more complexity. At Bramshill, we focus on five distinct asset classes / sectors in fixed income (investment grade and high-yield bonds, preferreds, municipal bonds, and U.S. Treasuries). RIAs, however, have even more strategies that they may utilize, many of which are advertising yield while ignoring the underlying risks. For several of our RIA and family office clients, Bramshill portfolio managers serve as an accessible resource for market insights on RIA’s underlying fixed income allocations. In that role, we urge clients to re-evaluate the quality of the yield they are implementing in client portfolios; in other words, consider the risk reward of each fixed income investment.
In our previous blog, we teed up five metrics for income investors to consider. Today, we will discuss the first metric, Yield relative to Duration.
Yield ÷ Duration
Jeffrey Sherman at DoubleLine Capital, a firm for which we have much respect, has defined yield/duration as “The Sherman Ratio.” A link to his paper can be found here. While it appears on the surface to be a simple metric, it is immensely valuable in a rising rate environment. The Sherman Ratio measures the amount of interest income generated relative to the interest rate risk being taken. Essentially, yield / duration measures the breakeven point at which falling bond prices will overwhelm the interest income thereby resulting in a capital loss (i.e. the percentage increase in rates that will wipe out the yield). Ultimately, when evaluating potential fixed income solutions, all else being equal, the higher the Sherman Ratio, the more your yield can withstand a rise in rates. Said another way, in a rising rate environment, falling bond prices can quickly erase one’s interest income. Risk management in core fixed income is, in our opinion, becoming a critical component of an RIA’s due diligence.
BRAMSHILL BLOG: From the Desk of Art DeGaetano.
Market Insights from Bramshill Investments: June was characterized by a market environment which was extremely complacent ahead of the Brexit