We seek to capitalize on opportunities in municipal markets created by the mispricing of securities or misunderstood information by using a consistent investment process that combines a bottom-up, fundamental, research-driven approach with a top-down perspective.
We begin by outlining our macro view about the economy, interest rates, inflation, and geo-political concerns, such as pending legislation that may impact taxes and sectors of the municipal market. This view guides our decisions relating to portfolio weightings for sectors, yield curve positioning, and duration.
As part of our fundamental, bottom-up process, we then review individual securities first from a credit perspective and then from a spread, or relative-value, perspective. This review includes examining documentation such as the offering statement, financial reports, and/or capital program plans. We also analyze cash flows, determine the individual security features of the bonds, and review the demand features of the project.
When our research is complete, we then review spreads and assign weights to likely outcomes over the next 24 months. Those bonds that we believe have the best relative value are purchased for our portfolios. Because the municipal market is dynamic, not static, we continue to review our valuations regularly to determine sell targets.