Distressed debt and special situation investing can be a complex and challenging investment strategy. When executed by experienced credit specialists, it provides portfolio diversification and delivers favorable risk adjusted rates of return to investors. 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 seek control positions and securities higher in the capital structure of distressed companies
- Utilizing direct and co-investment opportunities to generate alpha and offset fees
Key Tenets of our Investment Philosophy are:
Drum Capital employs a specialized team of turnaround advisors, distressed traders and middle market operators with over 150 years of cumulative experience in distressed debt and special situation investing. A strong understanding of the bankruptcy process, the value of a distressed company’s collateral assets and properly identifying strategies most appropriate for a given credit cycle is essential to generating returns.
Drum Capital’s funds are focused solely on turnaround, distressed debt and restructuring opportunities. Our emphasis on these strategies provides access to managers, deal flow and ensures our investors maintain consistent portfolio exposure to distressed 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 general partners and co-investments representing a cross-section of distressed debt, special situation and turnaround investment strategies. Distressed investments are often counter-cyclical to the strength of the domestic economy and provide low correlation to traditional asset classes and alternative strategies.
Drum Capital employs a comprehensive screening process that considers both quantitative and qualitative metrics when assessing the manager’s core competencies, performance and overall fit within the fund. Drum Capital’s goal is to add value by thoughtfully constructing diversified portfolios and by making select commitments to successful and sought after managers as market conditions develop.
Drum Capital funds have performed consistently over time, through various market cycles. It is our belief that strong performance is broad based and generated across the portfolio through strong research and credit analysis. We avoid unique non-corporate opportunities, in particular, binary outcomes where one or two investments are responsible for the majority of a portfolio’s return.