High Income Marketable Alternatives
November 03, 2022
In this episode of Engaging Alternatives Spotlight, Elana Margulies-Snyderman, Director, Publications, EisnerAmper, speaks with Floyd Tyler, President & CIO of Preserver Partners, a Memphis-based investment manager focused on high income, marketable alternative portfolios. A former Partner at Gerber/Taylor Capital Advisors, Tyler shares his views on investing in high income marketable alternatives portfolios, including the greatest opportunities and challenges, how the firm integrates DEI and more.
Transcript
EMS:
Absolutely. Floyd, to kick off this conversation, tell us a little about your firm and how you got to where you are today.
FT:Sure, sure. So we're based in Memphis, as you said. We are Preserver Partners and we manage private funds as well as a mutual fund or high net worth and institutional clients, primarily in the southeast, but we certainly have clients in other parts of the country.
How I got here, I spent some time as a Investment Consultant and Head of Research doing institutional consulting for a mid-market consulting firm. And prior to that, I was a Finance Professor at the University of Memphis.
EMS:Very interesting background. Floyd, giving your focus on investing in high income marketable alternatives portfolios, I would love to hear your outlook for this space.
FT:I think it's really interesting. I mean, I think in terms of what's happening in terms of the higher rates, the dislocations that are occurring in the markets, it's creating lots of opportunities in marketable alternatives. We benefit a lot from floating rates. We benefit a lot from dislocations, our ability to be a capital provider to investors who need capital, who need space or capital to grow their businesses or to grow their credit facilities. So it's a really interesting time to be an income investor. It's only getting better from here.
EMS:Absolutely, Floyd. And what more specific opportunities do you see in the space?
FT:So we've been investing quite a bit in areas where we think we can make money this year as well as make money next year in possibly a slower-growing or recessionary environment. So strategies where there's contractual income, it's longterm lease payments, things like that are where we're finding the most opportunities. So things like rail car leases or leases on inland marine vessels, think tug boats and barges. We also see some really interesting opportunities in trade receivables or e-commerce receivables. So all of those strategies benefit from contractual income. It's stable, it's uncorrelated to traditional stocks and bonds, and the income yields are really attractive.
EMS:Floyd, to shift gears a little bit, and you mentioned possible recession, on the heels of that, where are some of the greatest challenges you're facing and why?
FT:Well, just in terms of the recessionary environment, I think any credit investor is going to be concerned with what happens to the credit trajectory of the economy and to their underlying investments. So credit becomes more challenging, I think, in a recessionary environment. So that's an issue.
And then I think just as a firm, I think we are challenged of just as a young firm of just talent, identifying good talent and retaining them and grooming them to help us to grow the firm and to be successful.
EMS:So like being a minority-owned firm, you clearly integrate DEI and I wanted to ask you more specifically how else you're integrating it at the firm or on the fund level?
FT:So great question. We're trying to think about it holistically.
So the first level is what do we own in the portfolio? So 32% of our investments are affiliated or managed by diverse firms, so minorities or women. So that's important. Our goal is to get that north of 40% and it's a challenge, but we're working on it and we're certainly doing it intentionally.
The second part of it is, how do we run the business? And so when we think about when we are selecting vendors, whether it's printing or legal or accounting, making sure that we have a diverse pool of vendors that are helping us to grow the business. And then also 80% of our staff is minority or women. So even though we're small, it's still 80%.
And then lastly, there's some pretty significant efforts through our foundation that we started a few years ago. And what we're doing there is trying to make Memphis better by investing and or creating initiatives around the economic opportunity, education, and social justice. And so holistically, we think all of those things represent who we are and it's a very holistic way of thinking about DEI from our perspective.
EMS:Floyd, we've covered a lot of great ground today, very inspirational. So I wanted to see if you have any final thoughts you'd like to share with us in this podcast today.
FT:Well, sure. Well, thank you again. Thank you for having me. But I would say it's a great time to be investing in alternatives in terms of what's happening in the equity markets and the fixed income markets. Safe, less correlate alternatives, offer real diversification, so I think that's important. And I think it's important what you're doing in terms of this podcast, in terms of shedding light and on diverse, maybe less well-known managers like Preserver Partners, so we really appreciate that.
EMS:Floyd, absolutely, and I wanted to thank you so much for sharing your perspective with our listeners. And thank you for listening to the Eisner Amper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next Eisner Amper podcast when we get down to business.
Transcribed by Rev.com
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