Highland Capital is a well-known alternative investment management firm founded in 1993. Over the past three decades, it has established a strong track record across various investment strategies such as structured credit, private equity, and real estate. Highland’s core expertise lies in analyzing and investing in distressed and undervalued securities. The company takes a value-focused, research-driven approach to identify attractive investment opportunities that can generate alpha for its clients. Highland has a global presence with offices in Dallas, New York, Sao Paulo, Singapore etc. It manages assets worth over $25 billion for a diversified client base that includes public pension plans, endowments, foundations, and sovereign wealth funds. Some of the key factors behind Highland’s success include – strong risk management, innovative products, sector-focused teams with deep domain knowledge, and a disciplined investment process.
Highland’s expertise in structured credit investments
Structured credit represents a significant portion of Highland’s AUM across CLOs, CDOs, distressed credit, and structured notes/derivatives. The structured credit team analyses stressed, distressed, and structured securities to identify market inefficiencies. They combine top-down macro views with fundamental bottom-up research. For instance, Highland identified an opportunity in specialty-finance CLOs in 2004-05 by analysing the underlying consumer and SME loans. They focused on securities with strong collateralization and structural protections to minimize defaults. This strategy generated 17%+ returns in the first year itself. Highland also saw great opportunities in structured aircraft securitizations in 2020 when air travel got disrupted but aircraft values held up much better. They could buy quality ABS securities at high yields and attractive risk/reward. Highland has one of the longest track records in alternative credit and continues to deliver alpha for its clients.
Highland’s private equity and venture capital investments
Beyond liquid credit, Highland manages over $3 billion in private equity style vehicles focused on areas like healthcare, technology, and real estate. Examples include Falcon Funds for US oil & gas assets, Highland Brazil Fund, Korea Fund etc. Highland Venture Capital was formed in 2020 to leverage the firm’s networks and tap into startups disrupting traditional industries. For instance, Highland recently invested in a blockchain data analytics provider that serves the private credit and digital assets space. Given Highland’s specialized knowledge and expertise across alternative assets, the fund can add significant value for portfolio companies beyond just capital. They also launched a Special Purpose Acquisition Company (SPAC) to acquire a tech-enabled asset management firm which clearly highlights their domain capabilities.
Highland’s strong performance across market cycles
Highland’s core expertise lies in managing credit strategies across varied market environments. During the 2008 Financial Crisis, when many funds got into distress – Highland was able to preserve capital and even pursue distressed asset opportunities. This exemplifies their risk management and experience across credit cycles. More recently, in 2020 amidst the COVID turmoil – Highland’s liquid alternative mutual funds delivered strong positive returns while equity markets faltered. The veteran team has successfully navigated crises in the past which gives confidence in their strategies. While chasing yield, Highland places strong emphasis on risk controls like portfolio diversification, managed volatility, and liquidity. Ultimately for investors, funds like Highland aim to deliver equity-like returns with significantly lower risk compared to long-only equities.
To conclude, Highland Capital stands out as a leading alternative asset manager known for its expertise in structured credit, private equity, and distressed strategies. Its strong long-term track record and value-focused investment philosophy make Highland strategies compelling for investors looking to diversify beyond traditional stocks and bonds.