Strategic
Income
Management,
LLC
1200 Westlake Ave N,
Suite
713
Seattle, WA
9810
9
www.sim-llc.com
Gary
Pokrzywinski,
CFA,
Lead
Portfolio
Manager
Brian
Placzek,
CFA,
Portfolio
Manager
Tim Black, JD,
CEO, CCO
Strategic Income Management, LLC
Founded
October
,
2010
•
Independent, 100% employee owned
•
Founders former senior portfolio managers at WM Advisers/Edge Asset Management
Experienced, Cohesive, Focused Team
•
Senior
Investment
Team
members
have
over
5
0
years
of
Fixed
Income
experience
focusing in high yield since 1998
•
70% of those years as a team at WM Advisors/Edge Asset Management
•
All senior team members hold the Chartered Financial Analyst (CFA) designation
High Yield
Focused
•
Disciplined and methodical investment process
•
Long-term
approach
to
ascertain
value
within
high
yield
market
3 Please see biographies located at end of presentation.
Gary Pokrzywinski, CFA
Chief Investment Officer/Portfolio Manager
27+ years experience
Director of Research - High Yield/Portfolio Manager
29+ years experience
High Yield
Investment
Analyst
5+
years
experience
Brian Placzek, CFA
Ryan Larson, CFA
Jeston LaCroix
Mr. Pokrzywinski and Mr. Placzek Have Worked as a Team on Fixed
Income Since 1992 and Dedicated High Yield Since 1998
Julia Landa
Operations Specialist
5+ years experience
High Yield Trader
4+ years experience
High Yield Track Record Since 1998
•
Utilizing same HY philosophy developed and employed for over 11 years at
previous employer, Principal/Edge Asset Management
•
Had top decile performance over those 11 years at Principal and grew assets
from a few million at inception to $2.4 billion; achieved Morningstar 5-star
rating in all periods (see GIPS compliant presentation - supplemental material)
•
assets
Have
also achieved
to $
7
2
0
million
top decile
from
a few million
performance
at inception
at
SiM and have
in
February
grown
of 2011
HY
Utilizing the Same High Yield Team and Philosophy
Since 1998 to Achieve Top Decile Performance
SiM High Yield Bond Investment Process
Long Term Focus
•
Secular Trends
•
Industry Focus
•
CFO Approach
Opportunistic
•
Out-of-Favor Sectors
•
Capital Structure/Non-Traditional Investments
Long Term Structural Advantage Combined with
Market Created Opportunities
7
•
Demographics
•
Low Inflation/Disinflation
•
Technology/Productivity
•
Evolution of Emerging Economies
•
Globalization
•
Regulation
Wind at Your Back
•
Industry First
•
Market Glosses over Industry
•
Supply/Demand, Economics 101
•
Even Best Companies will Struggle in Poor Industries
Secular Trends and Industry Focus
Wind at Your Back
9
Analyze Companies as if Sole Owner
•
Correct Capital Structure
•
Correct Capital Expenditure
•
Cash Flow Stability
•
Competitive Advantage
•
ROIC
•
Good Business
Secular Trends, Industry Focus, CFO Approach
Wind at Your Back
Out-of-Favor Process
Analysis
•
Target Sectors with Long
Term Viability
•
Determine Industry Drivers
•
Identify Path for Rebalancing
of Industry
Result:
Typically the better
companies, not the cheapest,
offer compelling value in the
out-of-favor areas
Historical
•
Asia
•
South America
•
Technology
•
Healthcare
•
Telecommunications
•
Biotechnology
•
Utilities
•
Financials
Opportunistic/Out-of-Favor
•
Auto Retail
•
Gaming
•
Protein
•
Airlines
Current
•
Western Europe
•
AG/Fertilizer
•
Energy
The Market Continually Provides Opportunities
Capital Structure/Non-Traditional Investments
Capture Relative Value
Equity
Inv Grade
Bonds
Emg
Market
High Yield
Loans
REITs/
Income
Convert
Bonds
High Yield
Bonds
High Yield
Bond
13
Investment Grade Debt
–
take advantage of “fallen angels” or “out-of-favor”
industries and sectors.
Bank Loans
–
large liquid segment of the high yield market. Move up the capital
structure to invest in good companies with excess debt.
Convertibles
–
typically rated below investment grade. Opportunities during weak
equity markets when convertibles become “broken” and trade towards high yield.
Usually decent companies in positive secular industries, but falling equity price.
REITs/Income Equity
–
high dividend payout structures.
Advantages when
dividend yield trades close to high yield. Mostly stable businesses with manageable
debt.
Emerging Markets
–
involved since 1994. Capture strong secular trends and
volatility opportunities. Increasingly EM companies mature into good businesses.
Capture Relative Value
•
Low turnover
is the result of investing in long-term secular trends and in
industries undergoing multi-year restructurings
•
Flexibility from index
means can discount sectors offering little opportunity
while focusing on positive sectors
•
When
out-of-favor sectors
recover and become fully priced we exit and may not
return for years
•
Bottom up,
analyzing with the eye of a CFO - correct financial structure, correct
cap-ex, cash flow stability, competitive advantage, return on capital, downside
protection
Philosophy Allows for a Focused, Highly Productive Team
Concentrating on Credit Investing, Not Silo/Index Investing
Portfolio Structure
•
Secular Trends/Themes
•
Industry Focus
•
CFO Approach
Opportunistic
•
Out-of-Favor Sectors
•
Capital Structure/Non-Traditional Investments
Long-Term Structural Advantage Combined with Market Created
Opportunities
SiM's Philosophy and Structure Allow Us to be Solely Credit Investors, not
Silo/Index Investors
Experienced Team With Long-Term Track Record
SiM High Yield Summary
Wind
at
Your
Back,
Better
Structure
Market Continually Provides Opportunities
Mr. Pokrzywinski is the Chief Investment Officer and High Yield Portfolio Manager for SiM. He has 27 years of experience in the fixed income financial markets. He currently manages the Morningstar 5-star*, American Beacon SiM High Yield Opportunities mutual fund, and prior to founding SiM managed the Morningstar 5-star**, Principal High Yield mutual fund from its inception in April 1998 to May 2009. Prior to SiM, He was the CIO and a High Yield Portfolio Manager for Edge Asset Management (and its predecessor), an affiliate of Principal Financial Group. He worked for Edge and its predecessor from 1992 to 2009. Prior, Mr. Pokrzywinski was an investment officer/portfolio manager for Firstar Investment Services Co. He received a bachelor's degree in finance and management information systems from the University of Wisconsin - Milwaukee. Mr. Pokrzywinski earned the right to use the Chartered Financial Analyst designation in 1989 and is a member of the CFA Society of Seattle.
Brian L. Placzek, CFA
Mr. Placzek is the Director of High Yield Research and High Yield Portfolio Manager for SiM. He has 29 years of experience in investment management and financial analysis, and currently manages the Morningstar 5-star*, American Beacon SiM High Yield Opportunities mutual fund. Prior to SiM, Mr. Placzek was Head of Fixed Income/Research at Edge Asset Management, an affiliate of Principal Global Investors. At Edge he worked with Mr. Pokrzywinski on the Principal High Yield Mutual Fund from its inception in 1998 until the Mr. Pokrzywinski’s departure in 2009. Mr. Placzek worked at Edge (and its predecessor) from 1990 to 2010. Prior to Edge he had been at Washington Mutual Bank, where he worked as an investment grade and high yield bond analyst/trader. Mr. Placzek earned the right to use the Chartered Financial Analyst designation in 1994, is a member of the CFA Society of Seattle and received a bachelor’s degree in liberal arts from Seattle University.
Ryan C. Larson, CFA
Mr. Larson is an Investment analyst for the SiM High Yield Team. Mr. Larson is responsible for trading in the high-yield fund, investment research and reporting analytics. He has 5 years of experience in investments. Prior to SiM, Mr. Larson was a research analyst at Caelum Capital, a Los Angeles based equity long-short hedge fund, from 2009 to 2010. Before Caelum Capital, Mr. Larson worked under the direction of a Managing Director at Wells Fargo in Seattle, Washington from 2008 to 2009. Mr. Larson earned the right to use the Chartered Financial Analyst designation in 2012 and is a member of the CFA Society of Seattle. Mr. Larson is also a member of the Chartered Alternative Investment Analyst Association (CAIA). Mr. Larson graduated with honors from Brown University with a bachelor’s degree in Commerce, Organizations and Entrepreneurship.
Jeston S. LaCroix
Mr.LaCroixisahighyieldtraderfortheSiMHighYieldTeam.Mr.LaCroixisresponsiblefortradingandreportinganalytics.Priorto joiningSiMin 2014,Mr.LaCroixwasafixedincometraderatNationalPennInvestorsTrustCo.,aPennsylvaniabasedtrustcompany.PriortoNationalPenn,from 2011to 2013,Mr.LaCroixwaswith MunderCapitalManagementin Birmingham, Michiganinmultiplecapacities,most recently as afixedincome trader/analystwherehewasresponsiblefortradinginvestmentgradeandhighyieldcorporatebondsforallofthefirm'sfixedincomestrategies. Mr.LaCroix has a B.A. in political science from the University of Michigan and an MBA from Wayne State University. Mr. LaCroix is a Level
17
Tim Black, JD
Mr. Black is the Chief Executive Officer and Chief Compliance Officer for SiM and is responsible for day to day operations and SEC compliance matters. Mr. Black is an attorney whose prior practice focused on corporate and securities matters, including issues relating to investment advisers and broker dealers. Mr. Black holds a B.A. from Colorado College and a J.D., with honors, from Seattle University.
Mrs. Landa is an operations specialist for SiM and is responsible for monitoring day-to-day high yield portfolio operations, reporting and compliance. Prior to joining SiM in 2015, Mrs. Landa was an energy risk control and credit analyst at Puget Sound Energy Inc., a Bellevue based utility company. Prior to PSE, Mrs. Landa was for five years with Union Bank of Israel, the sixth largest Israeli bank, where she was an economist in the Controls and Risk Management Department, responsible for monitoring derivatives market risks and trading activity, as well as the bank’s proprietary asset reporting and SOX compliance. Mrs. Landa has a B.A. in Economics from Tel Aviv University and an M.A. in Business Economics from Bar-Ilan University, Israel.
