Investment Philosophy

Our goal is consistency and frequency of investment returns. We seek to minimize volatility through our diligent credit research. Companies with favorable credit trends tend to be successful companies that will provide favorable long-term investment returns. Effective credit research also serves to provide downside protection.

Our investment philosophy of capital preservation through downside protection has enabled us to build a diversified platform of synergistic strategies. We focus on investing in securities with positive asymmetry that have been identified through our bottom-up credit research driven process. We seek to generate alpha and achieve top quartile performance across all strategies by adhering to our highly disciplined credit research investment process. 

Advent follows a four-step investment process:

Step 1:  Screen Universe

Advent uses quantitative models and proprietary screening to identify securities with attractive risk/reward characteristics.

Step 2:  Analyze Credit Quality

The credit-worthiness of the security is reviewed, using five years of financial data (interest coverage ratios, debt to capitalization, and cash flows), and the most recent year to date figures. Advent is most interested in companies with stable to improving trends in their financial ratios. This step is critical to minimizing credit risk. Advent evaluates credits for all of its potential holdings, while the credit committee evaluates credit on many corporate securities beyond those that just have convertibles and high yield debt outstanding, to give a complete look at an industry's status and outlook.

Step 3:  Analyze Equity Fundamentals

The underlying equity is analyzed from a fundamental perspective, using company financial statements, industry data and contacts with company managements. Underlying equity fundamentals are examined to identify company and/or industry dynamics that could act as catalysts for stock price appreciation. These include accelerating earnings momentum, changing industry dynamics, new product announcements, or corporate developments like a restructuring. Advent will also examine a stock when it perceives favorable industry trends that have the potential to benefit certain stocks, or when research on one company leads to a favorable impression of another, complementary business.

Step 4: Security Selection

Advent continually monitors securities in its portfolios to determine whether each holding provides the appropriate risk-adjusted rate of return. Advent will buy theoretically cheap securities that have attractive risk/reward profiles. Advent will sell when the security has achieved its target price, when the convertible has appreciated to the point where it no longer offers sufficient yield and/or downside protection, when the fundamentals have deteriorated, or a change has occurred at the company or within its industry, which suggests weak stock price performance or deteriorating financial strength.