Chenavari Investment Managers, the manager of Chenavari Toro (Toro) has provided an update, on its website, on its response to the outbreak of covid-19. A link to the full article is provided below. However, we are providing some key takeaways here:
- Volatility and dispersion are expected to continue for some time.
- The manager’s “fundamental long/short dynamic approach, coupled with convexity”, should allow it to generate alpha whilst protecting the downside.
- Its capability has been further enhanced by our proprietary risk system (Clark), which enables the independent risk and investment teams to monitor the funds’ profile in real time and adjust the sensitivity of our funds as fast as possible.
- Outsized investment opportunities often arise at times of market panic and the manager stands ready and
equipped to capture them when they arise.
- Within Private Credit and Leveraged Finance, all investments have been scanned to assess their potential exposure to the spill over effect from COVID-19 and the team has been engaging with our borrowers/issuers to understand
dynamics of business evolution and recovery.
- Within Private Credit, the manager’s focus on Specialty Finance loans, which are mostly asset-backed transactions with self-amortising features or short duration, should make transactions more resilient than traditional EV-based direct lending, especially in a downturn.
- The manager’s risk team has stress tested the portfolios and developed an internal COVID-19 risk score for countries
and sectors to which the funds are exposed. this takes into account the economic implications of COVID-19 on a certain sector and country, as well as each deal’s structure, covenants and other security features.
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