Turnaround and special situation investing can be a complex and challenging investment strategy. The Principals at Drum Capital believe that a sector focused allocation approach, managed by industry specialists, is the most effective way for investors to capture returns in a largely inefficient market. Drum Capital seeks to capture these deep value opportunities by:
- Building a portfolio of managers who deliver strong returns through turnaround and special situation investments
- Sourcing, underwriting and driving value in direct and co-investment opportunities in operating businesses through a deep value-focused strategy
Key Tenets of our Investment Philosophy are:
Drum Capital employs a specialized team of middle market operators with extensive experience in special situation and turnaround investing. Drum Capital believes a strong understanding of capital structures, asset collateral value and properly identifying strategies most appropriate for a given economic cycle is essential to generating returns.
Drum Capital’s funds are focused on turnaround, special situations and restructuring opportunities. Our emphasis on these strategies provides access to managers, direct equity and co-investment deal flow and ensures our investors maintain consistent portfolio exposure to value-oriented investment strategies.
Risk Mitigation Through Diversification
Drum Capital’s portfolio construction centers on maximizing returns while mitigating risk. Our investment team constructs a diversified portfolio of underlying fund and direct equity and co-investments representing a cross-section of special situation and turnaround investment strategies. These value orientated investments are often counter-cyclical to the strength of the domestic economy and provide lower correlation to traditional asset classes and other alternative strategies.
Drum Capital employs a comprehensive screening process that considers both quantitative and qualitative metrics when assessing individual investments, taking into account investment specific performance, stress-tested scenario analysis, track record and assessed levels of risk, as well as overall fit within the fund or separate account. Drum Capital’s goal is to add value by thoughtfully constructing diversified portfolios by making select investments in top-quartile investment funds, direct company investment opportunities and co-investments.
It is our belief that strong performance is broad based and generated across the portfolio through deep, detailed research and fundamental investment analysis. We seek asymmetric risk and return profiles, where our downside can be limited, with significant upside and a high likelihood of out-performance.