The Diversified Distressed strategy is the flagship strategy of Contrarian Capital Management and incorporates all aspects of the distressed asset class.

The strategy has a continuous track record from 1986 and has never used leverage.

The strategy takes the best investment ideas generated throughout Contrarian and utilizes all 34 investment professionals.

The portfolio construction is as follows:

• 80% senior investments believed to be lower risk, including U.S. Senior Secured, European Senior Secured, Trade Claims, Real Estate, Long Short, Direct Lending, and Structured Products.       

• 20% higher risk equity-like investments including U.S. Equities, European Equities, Private Equity, and Emerging Markets.   

We target “good companies with bad balance sheets” and try to create positions at 5 times anticipated cash flow or less.  We try to have different themes in the portfolio so that one type of event or financial shock will not affect the entire portfolio.  We use a “top down” approach in targeting industries that we expect to improve within the next 12 months for long positions and those where we expect material deterioration for short positions.

We get behind the numbers and in addition to traditional financial analysis use investigative research including discussions with management, competitors, site visits, former employees etc.