In this fireside chat, Marc Utay, Managing Partner at Clarion Capital Partners, shared his expertise on finding opportunities in the mid-market private credit structure credit space. With over 40 years of experience on the Wall Street, Utay provided valuable insights into the nuances of the CLO (Collateralized Loan Obligation) market and the advantages of being an independent player.

Timeline of Key Points:

1980s: Utay started his career at Drexel Burnham Lambert, where he was part of the leveraged buyout group with Leon Black, who later founded Apollo.
2000: Utay formed Clarion Capital, which has two businesses: a middle-market private equity business and a structured credit business investing in CLO securities.
2015-2016: Utay launched the structured credit business, focusing on the CLO market due to its counter-cyclical nature and potential for alpha generation.

Key Takeaways:

Counter-Cyclical Nature of CLOs: Utay emphasized that CLOs can provide a hedge against market downturns, as credit spreads widen, and investors can benefit from the resulting increased yields.

Importance of Data Analysis: Utay highlighted the significance of data analysis in identifying opportunities in the CLO market, citing the need for advanced software and quantitative models to navigate the complex landscape.

Barriers to Entry: Utay noted that the high cost of data analysis software and the need for specialized knowledge can create barriers to entry for new players in the CLO market.

Independent Advantage: Utay emphasized the benefits of being an independent player, allowing for more objective decision-making and avoiding conflicts of interest that may arise when managing captive capital.

Secondary Market Opportunities: Utay discussed the opportunities available in the secondary market, particularly in odd lots, where Clarion Capital has found attractive investments.

Evolution of Portfolio Management: Utay predicted that technology will continue to play a larger role in portfolio management, enabling more efficient data analysis and subtle pattern recognition.

Key timestamps:

00:09: Introduction to ION Influencers Fireside Chats
01:16: Transition to Structured Credit Business
02:15: Exploring Opportunities in Private Credit
03:46: Investigating CLOs as Countercyclical Investments
04:45: Engaging Investors and Addressing CLO Misconceptions
06:35: Comparison of US and European CLO Markets
08:39: Barriers to Entry in the CLO Market
10:40: Skills and Expertise in Private Equity, CLO, and Private Lending
12:32: Quantitative Analysis in CLO Investments
14:09: Strategic Thinking in CLO Investments
15:56: Market Phase Analysis for CLO Investments
17:33: Monitoring Leveraged Loan and CLO Markets
19:20: Opportunities in CLO Market during Market Sell-Offs
20:53: Advantages of Independent CLO Management
22:30: Expertise in the Secondary Market
23:49: Data Ingestion and Analysis
25:02: Opportunities in the Secondary Market
25:45: The Impact of Technology on Portfolio Management
27:06: Skills and Relationships in Portfolio Management
29:40: Conclusion and Thanks