Joshua Friedman: Out of the Box Investing Strategies | SALT Talks #50 | Summary and Q&A

TL;DR

In this interview, Josh Friedman, co-founder and co-CEO of Canyon Partners, discusses the current state of distressed credit investing and opportunities in the market amidst the COVID-19 pandemic.

Key Insights

• 💳 The Fed's actions to restore liquidity and stabilize the market have created opportunities in distressed credit investing.
• 😀 The COVID-19 crisis has exposed vulnerabilities in balance sheets, particularly in companies that were already facing challenges before the pandemic.
• 🪡 The market for distressed credit investing is likely to transition to a phase where patience and complex solutions are needed to fix balance sheet issues.
• 👮 Rule of law and predictability in the restructuring process are essential for credit investors, which makes certain jurisdictions more favorable than others.
• ✋ Equity markets have rebounded strongly, driven by the Fed's intervention, making alternative investments a more attractive option for investors looking for higher risk-adjusted returns.

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 at the intersection of Finance technology and public policy we've been doing these salt talks which are a series of digital interviews with leading investors creators and thinkers during the work-from-home per... Read More

Questions & Answers

Q: How long will the current rich environment for distressed credit investing last?

Friedman believes that the current market for distressed credit investing will continue for several years as the economic effects of the pandemic and balance sheet challenges persist. Opportunities will arise as companies with good businesses but bad balance sheets struggle to recover.

Q: What sectors within the high-yield market does Canyon Partners find attractive?

Canyon Partners is cautious about sectors like retail and energy, as they have been heavily impacted by the pandemic. They see opportunities in software and travel and leisure, but remain open to opportunities across various industries.

Q: How does the current crisis differ from previous financial crises?

Friedman acknowledges that every crisis feels different, but ultimately, they all pass and economies recover. He highlights the unique characteristics of the COVID-19 crisis, including the political and social uncertainty surrounding it. However, he remains optimistic that the crisis will eventually subside.

Summary & Key Takeaways

• Josh Friedman shares his background and educational achievements, highlighting his experience in alternative asset management and value-oriented investments.

• He explains Canyon Partners' focus on alternative credit investing and their preference for complex situations, such as bankruptcies and distressed assets, where they can create value.

• Friedman discusses a recent investment in a mortgage servicing company as an example of their approach to stabilizing balance sheets and structuring customized solutions for sponsors.