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TTU131: How CTAs manage their Cash ft. Mike Kastner, Principle & Co-Founder at Halyard Asset Management

Feb 13, 2023

47:46

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ANECDOTE

Halyard's Origins

Halyard Asset Management started in 2010, co-founded by Mike Kastner, Steve Boyd, and Adam Cohn after leaving a fund of funds.
Initially, they managed cash for newly wealthy individuals in Silicon Valley before extending services to CTAs.

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INSIGHT

CTA Cash Management Evolution

CTAs historically managed cash diversely, some using treasuries, banks, or brokers.
The 2008 crisis shifted focus to cash safety, leading to more considered strategies.

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ANECDOTE

2008 Money Market Fund Failure

A prime money market fund held significant Lehman Brothers positions, leading to a run and suspended redemptions after Lehman's bankruptcy.
This highlighted the need for cash managers to prioritize liquidity and safety alongside returns.

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Haliot Asset Management - What's the Backstory?

01:47 • 2min

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The History of Cash Management

03:40 • 2min

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CTA's Are More Conscientious About Making Sure Their Cash Is Safe

05:57 • 3min

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The Cash Management Space Has Gotten a Whole Lot Better, Mike

08:32 • 3min

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Cash Management - Is There a Philosophy to It?

11:03 • 3min

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What Do You Think About Liquidity?

14:03 • 3min

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Investing in Corporate and Municipal Bonds

16:53 • 3min

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Is There Anything You Can Do About ESG?

19:27 • 2min

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How Do You Manage Foreign Exchange Hedging in a Fund?

21:11 • 3min

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Cash Management - Risk Management?

23:53 • 2min

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What Are the Expected Returns in Cash Management?

How Do You See the World Right Now?

31:27 • 2min

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What Do You Think the Fed Really Is Saying?

33:24 • 2min

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Do You Think It's Still 5%?

35:06 • 2min

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The US Housing Market Is Going to Be on Hold

36:57 • 2min

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What Do You Think About Corporate America's Debt Management?

39:07 • 2min

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Do You Agree With Cash Management?

40:54 • 2min

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What Are You Most Excited About in 2023?

42:53 • 2min

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Top Traders Unplugged - What Are You Afraid Of?

44:55 • 3min

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Today, we are joined by Mike Kastner, Principle and Co-Founder at Halyard Asset Management, for a conversation on how they use fixed income instruments to manage the cash of many CTA portfolios. We discuss how managers have evolved in terms of the way they manage cash, how Halyard Asset Management construct a portfolio from a liquidity point of view and the current state of liquidity, how they approach credit rating and why they avoid buying paper from certain banks. We also unpack what they think the sweet spot for foreign exchange hedging is and how they approach risk management, why Kastner does not believe we are approaching a recession and that there is a likely chance of a significant fall in the long bond price, as well as what Kastner believes will happen in the housing market and much more.

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Read more about Halyard Asset Management.

Episode Timestamps:

02:40 - Introduction to Halyard Asset Management

04:12 - History of Cash Management

07:16 - What happened with money market funds?

09:34 - Has the Cash Management space changed?

11:02 - Cash Management philosophy

12:23 - A liquid portfolio

17:39 - Drawing the safety line

19:25 - Considering ESGs

21:11 - Managing cash in different currencies

22:41 - Balancing the mandates

23:52 - Managing risk

25:44 - Thinking about expected returns

27:05 - The evolution of fees

29:40 - Lessons learned

31:27 - How does Kastner see the world?

33:22 - Where are we heading?

37:00 - The global perspective

39:05 - The debt issue

41:30 - Why Cash Management is not Easy

43:00 - Expectations for 2023

45:59 - Thanks for listening

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