With limited opportunities for investing in distressed companies right now, the size and phase of a bankruptcy are key factors for possible investments as part of a credit portfolio, says Nancy Havens, Founder of Havens Advisors, and Richard Goldstein, Managing Director at the firm.
“We try and do full-out bankruptcies. And on the bankruptcy side, there are not that many bankruptcies to do right now. We’re interested right now in the size of the bankruptcies,” Ms. Havens said. “In credit, we are in a bunch of bankruptcies and strict event situations as well as high-yield situations that are also event related.”
Ms. Havens gives AMR Corporation (AAMRQ.PK), parent company of American Airlines, as an example of an investment opportunity for her firm. She said her firm has been known to short securities of companies that it believes will go into bankruptcy and/or are going to have a fairly substantial hill to climb in the future.
“We were blessed with a new one, recently American Airlines, which was a very nice big one,” she said. “We expect the bankruptcy business to continue, and do prefer, generally, and have larger positions in these specific situations in general.”
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