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Peter Troob

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69
first
2018-07-02
most recent
2018-07-02
sittings or episodes
1
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podcast

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  1. “What you have is a massive market about 1.1, 1.2 trillion of bonds in the high yield market, half of which are double B and half of which are below double B, that is weak. It's five times levered. And you have a market that's very vulnerable. Now, some people will say there are no defaults. Some people will say that these companies are doing okay. They can pay their interest. And all of that may be true. But right now, top line growth isn't there and these companies are struggling. At one point, that'll come to a head. And so now you have a huge amount of CLO issuance. And now bank loans are up to almost $1 trillion. So you're also a top-heavy capital structure. bonds with no covenants, you're going to finally have a problem. So the question is picking up three, four, five, six percent in high yield from today forward.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “The thing was that bonds and bank debt were tight, bonds were trading well above a hundred. You're effectively buying a put option because you know that the upside on the bond is capped due to callability on the bond. And of course, over those years from 14, 15, 16, 17, what's happened is refinancings have pushed out maturities in durations, and this word called convexity should be in people's heads more, because now a high yield bond has extreme convexity where it never did before, effectively every time rates move up, bonds will go down because you have longer durations. So what I see is companies that did not delever, they levered up because they were able to borrow cheaper, that's fine, they pushed out their maturities, very smart, they lowered their coupons because the market wanted yield and was searching for it.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Correct. I mean, I got now I might look back and say lucky, fortunate enough to put this same trade on in 200 end of six and be very successful in being short high yield bonds. Now either I got very right or I'm looking at a false premise to do it again. It's an interesting dynamic because of course I thought it was right. In 2014 I saw the same thing. So that's a while ago now.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I think any one year can come out differently, but I think over time you're going to get high single, low double digit returns out of the control leader, and you're going to get 500 basis points worse out of the other guys over time because you get caught as a small guy not getting all the information, not knowing”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “You know, I think you'll cut a better outcome. I don't know what they're telling people, but I want them to control their outcomes if they control them and they're wrong. They can own up to it, but if they control them and they're right, they've done it for the right fundamental work. If they're just getting in and out as they thinking they're traitors, but they've got $5,000, $6 billion, then they're more or less now, they're morphing into what I would call macro fund. Then you may as well look at the macro guys. Because if you want to be liquid and big, it seems like the macro world is the only place you really can do it. I don't think you can do it in the distressed world.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Only if there's enough investments in a bigger structure. Just if there's 30 investments in a $7 million average name, then that's $210 million. That's fine. But liquidity is not great when you are looking to sell 10 million of a high yield issue or an esoteric issue. You'll push that thing around. If a guy is to sell 50 or 60, they'll totally annihilate it. But I think the large players, there is no liquidity, but I don't think they're telling people there is liquidity. I mean, maybe they are. And if you believe there's liquidity in the large players, you're misunderstanding what they do. They structure deals, they own companies. They're not there to sell them. And if they do, there's no buyer because they are the bottom on the distress cycle. So they have to make something better and then jettison it as it gets better. If it gets worse, they're just going to keep putting money into try to fix it.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “You know, if you're a 20 million a pop and times 10 or 20 or 30 names, your liquidity is going to be better than if some guy owns 400 million of something. But not enormously better. What you really want is to go even further down and want your average size to be between two and six or seven million. I know it's...”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “That's it. And I would not if I'm talking to a couple hundred million dollar fund and they tell you a bunch of names that sound just like the big guy's names, that's nice, but you're just riding on the other guy.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Market, but really you're on a raft in their stream. You are not the guy who creates the stream. So I look at the big guys, they're institutionalized, they're very bright as a large money allocator. I go there or I go way downstream to guys who make their little, little, little, little rivers and downstream meaning like guys doing under $20 million need investments.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “This might be unfortunate for some of the listeners to listen to. And as much as I was and am a middle market distressed guy, the large guys have a big advantage right now. They really get the look at a better deal and they get to structure them themselves. You have to go pretty far down the curve, maybe sub twenty, sub fifteen million dollars kind of investments where they don't care anymore and where they don't care, the buyer who can get into these smaller deals can structure the deal. Remember what a big guy does well is he looks at a need and he structures around it. He doesn't look at a deal. He looks at a need. And what a small guy does is the same. The problem was everywhere in between you're just a rider on the other person's structure where you will never know it as well as they do ever. You might think you do, but you don't, so you can play.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “You know, they didn't at one point, but now they've gotten so large, I think the answer is absolutely yes. The very large players, I mean, the ones with North at 10, 20 billion, even bigger than that, they just have longer term assets they can make structurally interesting decisions, and they can both wait you out and buy you out in like rights offerings where you can't keep up with them. And so being the smaller guy allows you to be a little more nimble, definitely, but in the long run, they also get first look, they get last look at investments, and they're bright. So the combination, and you add that with money, it's formidable. I mean, it is distressed world has become institutionalized. It is not a free-for-all, which is, you know, everyone's sharing information anymore. It is fiefdoms that are being controlled by the larger player. And it's good for them.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Yeah, it's you're going through a bankruptcy, you're trying to figure out where you fit in the process. And in the meantime, there's money that needs to be spent. There's a waiting period, and your money, your investors' money has to be patient waiting with you. And if there is another party that has longer-term locked up money and can wait you out, you will eventually lose.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “The earliest mistakes I remember. I remember believing that when Home Depot and Lowe's were getting bigger and bigger that a little place called Heckinger's would live. And I believe there was something in there that they could still be a third player in a big market. And the answer was that was not right. Also, we got involved in early on in when you're dealing with large companies, this one happened to be Hara's Jazz down in New Orleans. You know, sometimes the guy with more money can wait you out. So you learn that I feel that when you get involved in investments, what you really want to understand is you want to either have control or you have to know that you were just a rider on the investment and hope that the decision makers have are like minded with you.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “You know, that experience was excellent. I mean, again, I like the idea of learning and trying to figure stuff out. And what I found was these guys worked smart and not, it wasn't like they didn't work hard. You worked hard all the time, but you didn't have to do it by sitting at an office all night. And they made decisions that then had impact on their returns. And it was a great experience. I mean, it still is.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Well, I think it tires you. It drains you. And it was a great experience to do it, but it wasn't a career path I wanted to choose. And at that time, it was nineteen ninety six, the hedge fund business was really just getting going in earnest, and I was lucky enough to find a headhunter who put me in touch with a hedge fund. I didn't even know what a hedge fund was, and off I went into the world of hedge fund land.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Well, at that time, again, this is pre-internet days at the end of that book, we were doing everything from constantly putting stuff through the copy machines. We had to basically deal with rewrites constantly and a lot of just waiting, you know, waiting for the phone calls from the senior bankers to continue to tell us how we had to rechange something. So we would sit around from about 8 p.m. till 2.3 a.m. being a master word processor out of a business school.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “For a young investment banker, which I was at the time, it's really just about a coming of age, of realizing that the emperor has no clothes, realizing that you're toiling in obscurity probably for less than fifteen dollars an hour, even though you thought you were, you know, going to be master of the universe. And some people can continue on that path and they become successful bankers. Other people, such as myself, didn't have the patience or the time to wait for that and decided that time was more important to me than money and I wanted to move on.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “I actually graduated Duke in 1991 and I didn't know what I wanted to do. My father was on Wall Street and so was my brother, so I worked at kid or peabody. It doesn't exist anymore, but it was fun. I was lucky enough to go back to Harvard Business School and on the way back out because I distill didn't know what I wanted to do. I went back into banking at DLJ. And after a very short time there, I realized I was doing the same thing that I was doing back at Kidder except I was older and more tired. And after leaving there, I decided to write a book with a friend of mine about that time, and it's called Monkey Business Swinging Through the Wall Street Jungle.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “My guest on today's show is Peter Troube, the co founder and chief investment officer of Trube Capital Management, an opportunistic investor and family office with particular expertise in distressed situations. Prior to starting TCM in 2002, Peter spent six years focusing on distressed debt investing at contrarian capital and Everest Capital. He started his career as an investment banker and after his tenure in self-proclaimed purgatory, he co-authored the entertaining book Monkey Business Swinging Through the Wall Street Jungle. Our conversation begins with life as an investment banking analyst and turns to competing with large distressed funds, the frothy high yield market, trickery in the CDS market, high yield ETFs, idiosyncratic opportunities, diversifying family assets, managing teams, and learning from the dinner table.”

    2018-07-02 · Capital Allocators · Peter Troob – Monkey Business in High Yield (Capital Allocators, EP.59) · IDENTIFIED FROM THE TRANSCRIPT · source