Cover art for podcast The Derivative

The Derivative

91 EpisodesProduced by RCM AlternativesWebsite

Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. Hosted by RCM Managing Partner, Jeff Malec, join us to take a ride through… read more

1:14:02

Blissfully Buying BB Bonds with Greg Obenshain of Verdad Capital

In this episode, we're stepping away from our ordinary world of futures and options to find out why boring old corporate bonds aren't all that boring after all. Join our conversation with Greg Obenshain, Partner and Director of Credit at Verdad Advisers, as he and Jeff discuss just what running a high yield bond investments portfolio is like. Greg shares the complexities of accessing and organizing the needed data to run a quantitative model on bonds (think no central exchange nor shared order book, etc.), how he racks 'em and stacks 'em, and why there should always be a fundamental lens on quant outputs at the end of the day. He gives some real-world examples talking about the bonds of Netflix, Crocs, and Oil& Gas companies; and why there's a sweet spot between BBB and B-rated bonds.

Speaking of ratings, we ask Greg how his custom quant model assigns his own ratings, how and why those differ from the ratings agencies, and why multi-billion firms don't model this area of the high yield market similarly (he says it's not sexy enough). We finish the chat touching base on some topical bond/rates areas, such as Evergrande's potential default, the debt ceiling, yield farming, private credit, private equity's big debt appetite, and more. You'll also find some nuggets on duration, stripping out Treasury yields, and what both retail and institutional investors typically get wrong when considering holding bonds in a portfolio. Enjoy the chat!


Chapters:

00:00-02:47 = Intro

02:48-07:27 = London Tea, a Midwest Twang, and Dartmouth Green

07:28-20:50 = Becoming a Quant, Finding Verdad, and Racking and Stacking

20:51-41:24 = Finding Growth vs Getting Paid for Default Risk

41:25-56:15 = Cash in and Cash Out, and Record Tight High Yield Spreads

56:16-01:09:10 = High Yield Risk, Private Credit, and what everyone gets wrong about Bonds

01:09:11-01:14:02 =Favorites


Follow along with Greg on Twitter @GregObenshain and learn more about Verdad Advisers at verdadcap.com

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

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