We Study Billionaires - The Investor’s Podcast Network TIP381: High Yield Masterclass w/ David Sherman
Sep 24, 2021
In this discussion, David Sherman, founder and president of CrossingBridge Advisors, shares his expertise on high-yield corporate debt, emphasizing responsible credit strategies. He delves into short-duration investing and the complexities of bond pricing, highlighting the risk-reward dynamics of this often-overlooked asset class. David also explores the role of SPACs and the importance of thorough due diligence in assessing investment opportunities, while intertwining discussions on ESG factors and innovative investment platforms in the corporate debt landscape.
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Path to High-Yield
- David Sherman's interest in high-yield began with a cold-calling job at Dean Witter.
- This exposed him to high-yield debt and led to an internship at Drexel Burnham.
Mitigating Risk
- High-yield investing requires bottom-up financial analysis, similar to equity analysis.
- Distressed investing, however, focuses on businesses with strong fundamentals but manageable debt.
Debt Pricing
- Corporate debt is priced based on credit ratings and spreads over Treasury bonds.
- Higher risk equates to higher spreads and potential for greater returns.