Jason Mudrick: Event-Driven Investing | SALT Talks #23

TL;DR

Jason Mudrick, founder of Mudrick Capital Management, specializes in distressed credit investments and discusses the current opportunities in the market.

Transcript

hello everyone welcome back to salt talks my name is John Darcy I'm the managing director of salt which is a global thought leadership forum and networking platform at the intersection of Finance technology and geopolitics we've been doing these salt talks which is a series of digital interviews in lieu of our physical conferences during this work ... Read More

Key Insights

• 🏍️ The current distressed investing market is larger than previous cycles, with approximately $3 trillion of leveraged credit outstanding.
• 🖕 Smaller middle-market situations offer unique opportunities for active involvement and value creation.
• 🚬 The e-cigarette industry represents a significant disruption to the combustible cigarette market, with potential for substantial growth.
• 🥺 The COVID-19 pandemic has accelerated secular changes in industries such as travel, leading to opportunities in distressed investments.
• 🪘 Longer lock-up private equity funds are preferred for distressed investing to align with the longer holding periods and maximize value realization.
• 🗺️ Business travel is expected to be impacted long-term, while personal travel is likely to rebound strongly once restrictions are lifted.
• 👋 Mudrick Capital Management focuses on industries with good business models and bad balance sheets, providing opportunities for significant returns.

Questions & Answers

Q: How does Mudrick Capital Management differentiate itself in the distressed investing market?

Mudrick focuses on smaller middle-market situations and takes an active approach, sitting on boards of directors and creditors' committees to drive change and maximize returns.

Q: What is Mudrick's investment thesis on e-cigarette company NJOY?

Mudrick believes that e-cigarettes offer a reduced-risk alternative to combustible cigarettes, addressing the significant health concerns associated with smoking. The company sees potential for significant growth in this market.

Q: How does Mudrick view the prospects for business travel in the aftermath of COVID-19?

Mudrick believes that business travel is unlikely to return to pre-pandemic levels due to the adoption of remote working and video conferencing technologies. However, personal travel is expected to rebound strongly once restrictions are lifted.

Q: How does Mudrick approach investment structures in distressed investing?

Mudrick prefers longer lock-up private equity style funds that align with the longer holding periods often required in distressed investments. This allows for better value realization and the ability to actively manage and drive change in portfolio companies.

Summary & Key Takeaways

• Mudrick Capital Management specializes in long and short investments in distressed credit.

• The current economic downturn has created a large market for distressed investments, with approximately $3 trillion of leveraged credit outstanding.

• Mudrick sees significant opportunities in industries such as travel, LBOs, and disruptive technologies like e-cigarettes.