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Does anyone know whether the issue of "key person risk" has been addressed anywhere with regard to the several funds managed by this advisor? It's a bit awkward being so blunt about it but one individual seems largely to be running the show here (which is an observation rather than a criticism).
Hello sfnative. I too, have thought the same about whether the extremely talented and skillful money manager David Sherman is being stretched too thin. The depth of his security analysis is phenomenal as illustrated in his quarterly commentaries, which I greatly appreciate. But how many securities can be scrutinized to that degree? I don't know. Only Mr. Sherman and his team know that answer.
According to the most recent CrossingBridge Funds SAI, David Sherman manages roughly $1.5B and his assistant manager Kirk Whitney manages $315M. Perhaps Mr. Sherman could address whether he perceives this as being an issue going forward, and if so, how he plans to mitigate it (close CBLDX?). Thanks for the question, sfnative.
Good query re: Sherman. BTW, do either of you two have a sense of how CBLDX (which I own) might behave once the Fed starts cutting? My goal with my stake is to outperform MMKs.
A proxy for estimating how CBLDX might do once the Fed cuts interest rates may be to look at how the fund has done since the 2-year treasury note peaked this year at 5.04% on April 30 (It now stands at 3.57%)
There are 3 questions here: 1. Can Sherman manage more? That seems like the easiest one to answer. His sandbox is huge. One doesn't need to analyze more securities, just take larger positions in existing securities. The fund could handle a lot more in AUM.
2. Who else is part of the research team? We know of Kirk who talks on the quarterly calls. Here is the team: https://www.crossingbridgefunds.com/team Still, key man risk exists everywhere including at Berkshire Hathaway, Nvidia, and Tesla. No risk no return. Q for posters is what do you think Sherman "should do" to handle key man risk?
3. How would CBLDX do? it will annualize at 7% for next year or two regardless of the pace of fed cutting. If we enter a giant recession, the number would have to be adjusted for defaults. However, this fund has suffered lower default rates compared to many high yield funds. In fact, of most of the comparisons above by mnzdedwards (outside of tbills), CBLDX has the lowest drawdown since april.
Pardon a dumb question - Why is it harder to manage a larger amount? To wit - Buffett claims he could do better as a small investor because adding to and disposing of holdings wouldn’t cause as much price change / front-running. But that’s a different issue. I can’t see where 5 different managers managing $1.5B ($300M each) would necessarily improve performance. How much does Giroux manage?
Purely an academic question / no involvement in the funds under discussion.
I added CBLDX to the bond fund gaggle in my IRA because it had a positive return in 2022. I'm guessing XONE would have too. Since April 30 XONE is up 2.87 to CBLDX's 2.54.
The rest of my deck chairs are THOPX, up 5.08%, USTB up 4.72, and TBUX up 3.05. Stock Charts doesn't seem to recognize WSHNX. These funds all had various negative returns in 2022
As you can see, a mix of shorter durations and credit qualities. By this time next year I expect 'll have this list narrowed down considerably. So I'm not too worried about key-man risk.
Per @Devo's point two: Team management seems to work well for some companies that have been around a long time. Some companies have deep analytic benches. PRWCX was a successful fund before Giroux took over. Am I the only one that likes to look up older funds on older editions of Kiplingers on google books?
@mnz, Your second post revealed a lot more. Are you a trader? Welcome to my sandbox. Most investors like to hold for a couple of years. If you can predict rates in the nearest future, you can do pretty well. I also think that rates fell in anticipation for the Fed and why in the next several months we will not see the same magnitude. BTW, FEHAX beat your funds for YTD and no Fed taxes.
About one manager VS a team. I made most of my money with special managers. They are the ones with great risk/reward.
Hi FD1000. Thank you for commenting and joining the discussion. No, I am not a trader. The only funds that I own in the list I provided are CBLDX and PYLD. I, like you, like to invest with special managers in the bond arena. Who would you recommend beyond Mr. Sherman and Mr. Ivascyn? I appreciate your thoughts. Thank you.
Asking questions is fine. But DS may be under regulatory constraints to answer any and all questions on a public forum where everyone else besides him is also anonymous.
I think we should just appreciate what he can post and when.
Hi FD1000. Thank you for commenting and joining the discussion. No, I am not a trader. The only funds that I own in the list I provided are CBLDX and PYLD. I, like you, like to invest with special managers in the bond arena. Who would you recommend beyond Mr. Sherman and Mr. Ivascyn? I appreciate your thoughts. Thank you.
Mike
Unfortunately, I don't recommend funds, and I know some, long story why.
I don't check in very often but I noticed a bunch of excellent questions. I do not believe a discussion board forum is the best medium. Please feel free to contact [email protected] directly. That said, CrossingBridge has a very seasoned team that is excellent. We employ a team approach which is illustrated with multiple folks as portfolio managers on the funds as well as engaged on individual investments. When needed, we will grow the team. Please go to the website for details on our experienced investment and operation staff. I am confident that CrossingBridge will continue to perform beyond my demise. Further, CrossingBridge is very acute of our strengths and limitations. We pride ourselves on being very disciplined. We even have an internal metric referred to as ROR. ROR is return on resources.
Well said, Mr. Sherman. Thank you for so succinctly putting several of our concerns to rest. We appreciate your honesty and candor and wish you and the team well.
Comments
According to the most recent CrossingBridge Funds SAI, David Sherman manages roughly $1.5B and his assistant manager Kirk Whitney manages $315M. Perhaps Mr. Sherman could address whether he perceives this as being an issue going forward, and if so, how he plans to mitigate it (close CBLDX?). Thanks for the question, sfnative.
Mike
Since April 30:
CBLDX +2.54%
TBIL +2.00% (3-Month T-Bill)
OSTIX +3.76%
SHYG +5.70%
PYLD +7.60%
BINC +5.47%
https://stockcharts.com/freecharts/perf.php?CBLDX,TBIL,OSTIX,SHYG,PYLD,BINC
PS: Set number of days to 95 to match April 30 start date.
+8.78%....
1. Can Sherman manage more? That seems like the easiest one to answer. His sandbox is huge. One doesn't need to analyze more securities, just take larger positions in existing securities. The fund could handle a lot more in AUM.
2. Who else is part of the research team? We know of Kirk who talks on the quarterly calls. Here is the team: https://www.crossingbridgefunds.com/team
Still, key man risk exists everywhere including at Berkshire Hathaway, Nvidia, and Tesla.
No risk no return. Q for posters is what do you think Sherman "should do" to handle key man risk?
3. How would CBLDX do? it will annualize at 7% for next year or two regardless of the pace of fed cutting. If we enter a giant recession, the number would have to be adjusted for defaults. However, this fund has suffered lower default rates compared to many high yield funds. In fact, of most of the comparisons above by mnzdedwards (outside of tbills), CBLDX has the lowest drawdown since april.
Purely an academic question / no involvement in the funds under discussion.
The rest of my deck chairs are THOPX, up 5.08%, USTB up 4.72, and TBUX up 3.05. Stock Charts doesn't seem to recognize WSHNX. These funds all had various negative returns in 2022
As you can see, a mix of shorter durations and credit qualities. By this time next year I expect 'll have this list narrowed down considerably. So I'm not too worried about key-man risk.
Per @Devo's point two: Team management seems to work well for some companies that have been around a long time. Some companies have deep analytic benches. PRWCX was a successful fund before Giroux took over. Am I the only one that likes to look up older funds on older editions of Kiplingers on google books?
Your second post revealed a lot more.
Are you a trader? Welcome to my sandbox.
Most investors like to hold for a couple of years.
If you can predict rates in the nearest future, you can do pretty well. I also think that rates fell in anticipation for the Fed and why in the next several months we will not see the same magnitude.
BTW, FEHAX beat your funds for YTD and no Fed taxes.
About one manager VS a team. I made most of my money with special managers. They are the ones with great risk/reward.
Mike
I think we should just appreciate what he can post and when.
It may be helpful to contact the firm directly to make an inquiry.
https://www.crossingbridgefunds.com/contact
or [email protected]
DKS
Mike