High Yield Bond

Description

Through a sub-advisory relationship with SKY Harbor Capital Management, LLC., Westwood offers High Yield Bond management. SKY Harbor, a Greenwich, Connecticut based SEC Registered Investment Advisor, was formed in September 2011 as the dedicated provider of institutional US High Yield strategies.

The founding members of AXA Investment Managers, Inc., Hannah Strasser, Anne Yobage, and Thomas Kelleher, have worked together for more than 18 years. Hannah Strasser and Anne Yobage started investing together in 1990 and Thomas Kelleher joined them in 1992.

SKY Harbor’s Core High Yield strategy is a total return investing strategy with a goal of generating high total returns by investing in the full maturity spectrum of non-investment grade debt of U.S. companies. Fundamental credit analysis and risk valuing, coupled with portfolio positioning using market segmentation tools, allows a balance of risk control and alpha generation for clients portfolios.

Process

Purchase Discipline

SKY Harbor’s buy process entails seeking companies in improving industries, companies with stable business models and improving credit quality (specifically, positive year-over-year cash flow comparisons and excess cash flow that is used to improve creditworthiness). These securities have a high probability of outperformance due to their price stability or total return potential.

Sell Discipline

All positions are reviewed on a daily basis, and the proprietary financial analysis models are updated on a continuous basis. Any change in either the assessment of a security’s potential or in the credit research outlook will prompt a reassessment of the position. SKY Harbor enforces a strict selling discipline so as to reflect the volatile and asymmetric nature of corporate bond behavior. A security will be sold if the underlying company or industry fundamentals deteriorate, the bond becomes overvalued, or if management shows signs of steering its strategy away from the interests of bond holders. The three primary reasons to trigger a potential sale are:

• Company results disappoint versus our internal projections
• Relative value basis as a result of movements in valuation against other securities
• Sector rotation – as part of the fundamental and our macro analysis to identify cyclical trends of issues

Management decisions are taken on a consensus basis, with a conservative approach. The full investment team meets daily for a morning meeting which includes portfolio managers, the senior strategist, research staff as well as traders. The core inputs for these meetings are the team’s financial models, which serve as the basis for buy and sell decisions.

SKY Harbor’s philosophy and process has been thoroughly tested in a wide array of market and economic environments generating positive returns. Such a disciplined approach is what differentiates them from competitors, and what underpins their consistent track record.

More Information

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