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Season 3, Episode 11: Distressed Investing for Retail Investors

With Chris Krug, Chatham Harbor Capital

Chris Krug of Chatham Harbor Capital Management joins the podcast to discuss his hedge fund’s strategy of buying equity of distressed companies.

Krug has a unique background and a unique approach, targeting the equity of companies that are heavily indebted but face a transformation. He shares his insights with listeners with the understanding that nothing is to be considered investment advice.

Content Highlights
(Spotify users can click on the timestamp to link to the start of the segment directly)

  • Overview of Krug’s contrarian investment strategy: buying stocks of companies that are loaded up with debt (3:49);
  • Debt-to-Ebitda is not a great metric. Investors should look at debt to free cash flow instead (5:57);
  • Chatham Harbor’s screening process for new ideas (9:44);
  • The fund’s largest holding right now: a collections agency for the IRS and student loans that is transforming to a healthcare company (15:27);
  • A look at the macro picture: what if interest rates go up and it becomes harder for these companies to refinance? (28:05);
  • Background on the guest (30:28);
  • More about Chatham Harbor’s portfolio and its holding of a private prison company (34:03);
  • The small-cap game is about volume. You need to look at thousands of names and stay on top of the developments (43:42).