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Above the Clouds

Covalent Partners seeks to exploit inefficiencies in leveraged credit and special situations 

Leveraged Credit

 Total return focus in publicly traded high-yield bonds and leveraged loans with a tilt toward B and CCC rated credits, smaller and less-trafficked issuers, and stressed or distressed situations.

Balance Sheet Transformation

Spin-offs, asset sales, acquisitions, and joint ventures. Overlooked sum-of-the-parts with tangible paths to realization.  Seek aligned management or activist shareholders.

Leveraged Equities

Equities of companies with junk-rated debt are often discarded due to "excessive leverage."  Covalent seeks low valuations, improving fundamentals, adequate liquidity, and a path to deleveraging.

Intra-Capital Structure 

Identify the most asymmetric components within a capital structure to go long and/or short (i.e. long secured bonds and short "out-of-the-money" equity, or vice versa).  Includes convertible bond arbitrage.

Excessive Discount

Temporary company-specific or industry-wide headwinds create a historically wide discount to fair value.  Company typically faces a well-known negative narrative and is broadly disliked by the investment community.​

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