The fund investments typically fall into one of two categories: securities that provide the highest yield to maturity in which the Fund believes the issuing company will stay current on interest payments and will avoid bankruptcy, and securities issued by companies that the Fund believes are about to emerge or have recently emerged from bankruptcy.
Basically, we become involved when good companies stumble, and own them until they get back on track. We may hold these securities for an extended period until the improvements made through bankruptcy are reflected in market prices and, at times, we take an active role in developing the restructuring plan.
Our investment process is centered around in-depth fundamental analysis, and accurately assessing the risk/reward profile for each situation. In times when the credit markets are excessively accommodating, we will tend to own more post-restructured equities. When risk aversion is high, we will tend to own more performing and non-performing debt instruments. We attempt to reduce risk by not employing leverage, limiting single issuers to 10% of assets, and selling short subordinated securities when available. Our sell decision is determined by events in the restructuring process and relative valuation versus peers and historical levels.
The Fund will seek to achieve an overall average internal rate of return (IRR) of between 15-20% over 3 to 5 year periods.
Feb 2001 to June 2011 returns are from the Wilfrid Aubrey Growth Fund LP. Date of incorporation for this fund is May 26, 2011 as a simplification of the existing structure.