ASTON’S NEW FIXED INCOME MANAGER: TAPLIN, CANIDA AND HABACHT (TCH)
PORTFOLIO MANAGERS – TERE ALVEREZ CANIDA CFA, ALAN M. HABACHT, AND WILLIAM J. CANIDA CFA
Q: Could you give us a brief overview of Taplin, Canida and
Habacht (TCH) and your responsibilities there?
A: Taplin, Canida & Habacht (TCH) is a registered
investment advisor located in Miami, Florida. The
firm was founded in 1985 as Taplin/Canida Capital
Management and is owned by its principals. With
the addition of Mr. Alan M. Habacht as a principal
in 1987, the company became Taplin, Canida &
Habacht, Inc. The team of portfolio managers
averages 33 years of experience and has worked
together for nineteen years. There has been no
turnover among the portfolio managers since the
inception of our company. This team has been
responsible for the performance record of our
various fixed income strategies since 1990.
Q: What is your investment philosophy?
A: Our philosophy in managing fixed income
accounts is to add value above a benchmark index
utilizing governments/agencies, corporate bonds,
mortgage-backed securities, and asset-backed
securities within a narrow duration band.
Q: Would you elaborate on your investment strategy?
A: We emphasize corporate bonds within our
fixed income portfolios to capture the performance
advantage that corporates have historically
realized above governments and mortgages. In
addition, through yield curve and yield spread
strategies, we identify other attractive sector and
issue opportunities among governments/agencies,
mortgage-backed and asset-backed securities.
Q: What makes your process unique?
A: We believe our process is unique in our
integrated approach to research, portfolio
management and trading. The research team has
extensive knowledge of the trading environment
and works very closely with the portfolio
management team. This tight integration allows
for quick response times to changes in the portfolio
or strategy in order to identify relative value
opportunities.
We believe that our proprietary analytical tools
that support our integrated approach to credit
research and trading also represent an important
competitive advantage. We have internally
developed a comprehensive suite of proprietary
quantitative research applications that, combined
with a highly experienced, fundamental credit
research effort, define and differentiate our
process.
Q: How is value added to the portfolio?
A: Value is added through our approach which
emphasizes sector selection, yield curve strategies,
and spread analysis. Accordingly, the structure of
our portfolio relative to the benchmark index, in
terms of both sector and security weights, is an
important consideration in the portfolio
management process. Specifically, yield curve
positioning, sector selection, security selection,
asset allocation and maturity structure are integral
components of our portfolio construction process.
In contrast, duration management does not
represent an integral component of the portfolio
construction process, since we manage our
portfolios within a tight duration band to the
benchmark index and we do not seek to add value
through market timing. Our portfolio analytics
system serves as the cornerstone to our fixed
income process. Custom reports allow us to
analyze each portfolio versus customized indices.
These reports break down portfolios and
appropriate indices by sectors, maturity and
duration structures, coupon distribution, and
ratings categories. We also manage accounts with
guideline constraints that limit absolute exposure
to sectors and issuers, including high yield.
Q: Could you describe your research methods?
A: Internal research is critical to our decisionmaking
process. Corporate issuers are analyzed
across quality ratings within a given sector to
better understand the fundamentals that drive the
rating process. The focus of our fundamental
credit research is financial statement analysis and
peer group analysis, which includes analysis of
secular industry trends, the issuer’s competitive
position and relative credit metrics; as well as
profitability and cash flow analysis, which
includes analysis of issuer’s ability to service its
debt obligations. Additionally, our research
discipline includes corporate governance and
event risk assessment, which includes analysis of
practices and determination of management’s
ability to undertake bondholder-adverse transactions,
as well as covenant and structural
analysis, which includes analysis of the protection
provided by bond indentures and structural
subordination.
Q: How do you manage risk?
A: Taplin, Canida & Habacht has developed
TEAM (Track, Evaluate, Analyze, Manage), our
proprietary portfolio analytics and compliance
system, to analyze various risk factors and to
monitor portfolios to ensure compliance with
client investment guidelines. Our system is highly
flexible and is able to decompose both the portfolio
versus the benchmark index by any values that
populate the database. These reports break down
portfolios by sectors; maturity and duration
structures; yield curve; coupon distribution; and
ratings categories. Credit and default risk in our
portfolios is analyzed in terms of the various
exposures described in a portfolio context (i.e.
sector, quality, duration and concentration risk),
and on an individual security level in terms of
credit spreads available for alternative investments
based on our fundamental credit work and our
broader industry and economic assumptions.
Such analysis allows us to better understand our
portfolios’ sensitivity to changes in spread
relationships between various sectors and credits,
as well as changes to the shape of the yield curve.
Risks are also viewed in terms of pre-trade and
post-trade compliance with client investment
guidelines. All elements of client guidelines are
hard coded into the “Monitor” module of TEAM.
Monitor is connected to the “what-if” module in
TEAM where pre-trade screening occurs where the
portfolio managers are able to simulate trades
before actual execution to ensure guideline
compliance. Post-trade, our client compliance team
monitors compliance.
Q: What is your sell discipline?
A: Our sell discipline is based on our portfolio
strategy, relative valuation derived from our
fundamental credit research in conjunction with
our quantitative research, our TEAM (Track,
Evaluate, Analyze, Manage) portfolio analytics
system and portfolio guidelines. All sell decisions
are executed only after full consideration in a
portfolio context.
Q: How does the strategy correlate to other asset classes?
A: Our strategy historically has been less correlated
with other fixed income strategies at the same time
realizing a lower standard deviation of returns. In
addition, our strategy has outperformed in periods
of negative returns in the broad fixed income
market place. Since 1990 there have been fifteen
(15) negative quarters for the Lehman Aggregate
Bond Index. Our core fixed income composite has
outperformed in fourteen (14) of the fifteen (15)
down quarters.
Q: Do you have anything further you would like to add?
A: The focus of our firm is fixed income account
management. All resources of our firm, including
research; portfolio management; technology and
analytics and operations are dedicated to fixed
income account management. We have managed
fixed income portfolios with a long-term track
record of success since 1990. We have successfully
managed fixed income portfolios in a variety of
economic and interest rate cycles including bull
and bear markets, expansions and recessions, and
rising, flat and declining interest rate
environments.
Finally, we believe that the combination of a
proven investment approach, a stable organization
with a cohesive group of dedicated investment
professionals and a passion for our business
translate into strong performance. |
