Dear Client,
I’m writing to introduce myself and share some exciting news about PCS Research Group and Canyon River Advisors. After 15 years on the buyside, most recently as a Portfolio Manager at Brevan Howard focusing on special situations, event-driven and opportunistic credit and equities, I have joined PCS Research Group to build Canyon River Advisors into the leading dedicated special situations and event-driven research franchise.
Our pitch to you is simple. We don’t manage capital, so we don’t compete with you on positions. We don’t do investment banking business with corporate issuers, so we don’t have to sugar coat our views. We have no trading axe to move and we’re not seeking trading revenue, so our incentives aren’t misaligned. We simply want to provide unique and compelling idea flow, sound analysis, and attractive trade ideas so that our research is valuable to you.
What We’ll Cover
We define special situations quite broadly – any opportunity where we think future trading prices will be determined more by idiosyncratic events and circumstances than by earnings or general market forces. We will take a holistic view of the capital structure and identify the best instrument to express a view: common equity, preferred equity, convertible bonds, hybrids, secured and unsecured bonds, term loans, revolvers, super-priority instruments, contingent value rights, post-reorg equities, and debtor-in-possession and exit facilities, among others.
We will focus on three areas:
(i) Corporate actions. Strategic alternatives, spin-offs and split-offs, transformative M&A, divestitures, activism, litigation, tax conversions, shifts in capital allocation priorities, tender and exchange offers, etc.
(ii) Idiosyncratic events. Exogenous and endogenous shocks; historical examples such as First Quantum Minerals (Panama mine closure), Spirit AeroSystems (737 MAX grounding), Organon (channel stuffing), Super Micro Computer (chip smuggling) and Forward Air (failed sale process).
(iii) Stressed and distressed. Restructurings and liability management exercises.
Our Guiding Principles
Risk-taker mindset. There is a gulf between a sellside analyst making a buy/sell recommendation and a risk taker making a buy/sell decision. The latter requires risk taker DNA; research around the margins to create an edge, sizing the risks, framing the downside, running scenarios, understanding liquidity, the holder base and the technicals. I’ll leverage my 15 years’ experience on the buyside to provide you with this perspective. If we would not put the trade on in a principal seat, we will not recommend you do.
Brevity and scarcity are virtues. We will not flood your inbox. We will put forth only our best and highest conviction ideas as well as thoughtful analysis on topical situations. Our reports will be written as investment memos with a clear thesis and the arguments that support it. We will not spend pages restating public information. We will summarize the facts that matter and spend the rest of the space on value-added thoughts and analysis. Between memos we will send out briefs on tactical trades and developments worth monitoring.
Idiosyncrasy. We won’t be making market-based or macro calls. Systematic, market-based and economic risks can be hedged and we leave those views to you. We will focus on idiosyncratic situations that we believe have favorable asymmetry and through catalysts and events can provide excess returns in a variety of market conditions.
Partnership. We want to be your partners, an invaluable extension of your research process and investment team. Call us, email us, ping us on Bloomberg. Special situations investing is as much about relationships as it is about analysis. Over 15 years I have developed a network across the buyside, sellside and the legal and financial advisory communities built on honesty, trust and good faith collaboration. I know many of you and I look forward to meeting the rest. Sharing ideas, debating theses and offering variant views is how we iterate to the right call, anticipate outcomes ahead of the market, and create a network effect from which we all benefit.
In closing, our goal is to build the leading franchise in special situations research by putting forth thoughtful, well underwritten investment ideas that provide meaningful value to your investment process. There is a huge opportunity set out there and it continues to grow. This will be a collaborative effort and we’re looking forward to tackling it together.
Sincerely,
Jeremy Skrezyna
Managing Director, Head of Special Situations Research
Canyon River Advisors
jskrezyna@canyonriveradvisors.com
office: (646) 839-5584
mobile: (917) 370-9424