Advent Capital Balanced Strategy Update
BALANCED STRATEGY
Investment Philosophy... Focus on Positive Asymmetry
We seek superior returns from "theoretically cheap", positively asymmetric balanced convertible securities with
attractive risk/reward profiles offering 75% - 85% of the underlying equity upside, while limiting downside risk to
approximately 50%.
Investment Strategy
We identify stable to improving credits through our cash flow, interest coverage and balance sheet analysis.
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CAPITAL MANAGEMENT, LLC
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Credit analysis is the primary tool in selecting balanced convertibles, which has provided equity-like returns with
lower risk over time.
Credit focus enhances returns and limits downside risk by gauging probabilities of upgrades, downgrades, early
redemptions and corporate event risk; we often detect weakness before those who take an equity approach. We
avoid distressed convertibles.
A diversified portfolio helps to minimize risk with position sizes typically between 1% -3% with a maximum of
5%.
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