Ovation invests in niche markets where the supply of capital is scarce relative to the demand for capital.
Ovation’s goals are to preserve our investor’s capital, generate returns with low correlation to public markets, and provide quarterly distributions. We believe in balancing a conservative focus on absolute returns while remaining nimble as markets evolve. Ovation prefers to focus on principal protection and downside mitigation.
The niche markets where we focus are generally smaller in size and the need for operational expertise makes them difficult for larger financial institutions to source and service. Ovation believes it has advantaged access, evaluation or origination capabilities in these markets. Ovation’s investment selection emphasizes cash flow, collateral, short duration, and the ability to re-price. There is no mandate to benchmark to any index; thereby creating an artificial constraint that may restrict Ovation’s ability to achieve its stated objectives.
While many of these niche markets have existed for more than 10 years, and have a history of generating attractive returns, the disruption and subsequent fragmentation of the broader credit markets since 2008 has increased the relative isolation of these niche markets versus public credit investments (corporate high grade and high yield bonds, e.g.). Bank consolidation and increased regulation has resulted in a concentration of capital availability to only the larger borrowers through the issuance of public bonds or syndicated loans. The market for public credit is highly liquid and can be easily accessed by nearly all investors globally. As a result, the substantial in-flow of capital into public credit markets has lowered returns to investors.
Ovation believes the assets in the private credit and specialty finance markets may offer a better risk/return profile to their public counterparts. These assets may include (but are not limited to) tax lien loans, municipal tax liens, first lien loans backed by real estate, insurance-backed assets, non-performing debt, equipment leases, small business loans, and receivables finance.
Past performance is not indicative of future results, and there can be no assurance that any objective will will be met. Nothing contained herein should be deemed to be a prediction or projection of future performance of any portfolio.
FORWARD LOOKING/TARGET RETURNS
Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of any portfolio may differ materially from those reflected or contemplated in such forward-looking statements.
Target returns are subject to inherent limitations. One limitation is that the returns do not take into account the impact that market and economic risks, such as defaults, pre-payments, and reinvestment rates, may have on actual trading. In addition, target returns are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. In no circumstances should the expected returns be regarded as a representation, warranty or prediction that any portoflio will reflect any particular performance or that it will achieve or is likely to achieve any particular result or that investors will be able to avoid losses, including total losses of their investment. Inherent in any investment is the potential for loss. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.