Claren Road Asset Management, LLC is a long/short credit manager founded in 2005. Claren Road utilizes long/short credit, event-driven and capital structure arbitrage strategies primarily in the following global and regional markets: investment grade, high yield and distressed, Emerging Markets, Asia, European sovereigns and US municipal bonds. The investment style is a blend of fundamental internally-generated credit analysis with a trading-oriented focus on valuation and technicals. The Carlyle Group acquired a 55% stake in Claren Road on December 31, 2010. Claren Road serves as the investment adviser to private pooled investment vehicles, or funds, that are offered to investors on a private placement basis. The Founders jointly manage Claren Road’s day-to-day ordinary course of business operations.
Claren Road's investment strategy utilizes long/short credit, event-driven, and capital structure arbitrage strategies primarily in the markets for high-yield, distressed, high-grade corporate debt securities and their derivatives, and sovereign debt securities and their derivatives. The team primarily invests in debt instruments, within the confines of strict risk control procedures aimed at preserving capital. Claren Road employs a fundamental, research-driven value strategy, with special emphasis given to issuer asset quality, liquidity, and security-specific bond covenants and claim seniority.
Claren Road’s approach to identifying investment opportunities is driven by fundamental bottoms up research. Analysis of the investment merits of an issuer and its securities and other instruments is based on, but not limited to, the following (where applicable):
- Market valuation of an issuer's securities.
- Outlook for the industry in which an issuer operates.
- Credit metrics such as cash flow ratios, earnings, and overall balance sheet strength.
- Asset quality, particularly in stressed or distressed situations.
- Quality of management and its incentives toward its various stakeholders.
- Bond indentures and related covenant protections.
Claren Road also evaluates technical factors such as supply and demand, the market's expectations surrounding an issuer, and the existence of short and long term catalysts.