Investment Philosophy
Canyon pursues a multi-strategy investment approach across a number of asset classes including bank debt, high yield and distressed securities, securitized assets, convertible arbitrage, risk arbitrage, equities and other special situation securities. We seek to achieve superior risk-adjusted returns significantly in excess of the debt and equity market indices with substantially lower volatility. Our portfolio is broadly diversified. Value at risk per position is low, our largest positions rarely account for more than 3% of total assets under management and we generally employ little or no leverage.
Asset class allocations within our portfolio can shift dramatically over time due to changes in the investment landscape. Our emphasis is on bottom-up fundamental credit analysis, and our general philosophy is similar to that of traditional value investors. However, top-down macro views cannot be and are not ignored and, as appropriate, influence our implementation of bottom-up investment ideas. Broadly speaking, our roots in distressed investing have led us to emphasize traditional distressed debt concepts such as return of capital (as distinguished from return on capital) and scenario analysis. While we do not focus exclusively on event-driven scenarios, these kinds of investments are a core component of the portfolio and represent a strategy that can perform quite well even in declining markets.
As part of our due diligence process for individual corporate investments, we evaluate the underlying economics and financial staying power of the business, areas of strength and vulnerability within its capital structure, its capital markets options, the incentives of its management team, and its value relative to comparables.