Entering text into the input field will update the search result below

SA Interview: Distressed Investing With Green Knight

Mar. 10, 2018 7:30 AM ETSHL Holdings Ltd. (SYCRF) StockDELL19 Comments
SA PRO Interviews profile picture
SA PRO Interviews


  • Green Knight specializes in distressed, deep value, event-driven, and special situations across the capital structure.
  • How to find distressed opportunities, an example of an ideal event-driven trade and the appeal of bank debt vs. HY are topics discussed.
  • Green Knight shares a long thesis on Syncora.

Feature interview

Green Knight is a distressed, event-driven, special situations, deep value long/short fund manager with investments across the capital structure. We emailed with Green Knight about the huge asymmetric upside in Dell Technologies (DVMT), what to look for in bankruptcy documents, and why investors should stay away from frac sand players.

Seeking Alpha: Where are you finding distressed opportunities? How has the favorable financing market impacted the space, and what are the implications going forward?

Green Knight: Distressed opportunities are very limited right now. Credit markets are still buoyant and willing to fund just about anything. Basically, the only companies going bankrupt right now are bad businesses with some fundamental flaw or negative secular industry growth. If it is growing, though, no matter how unsustainable the capital structure, the credit markets will find a way to keep the show going. It doesn't seem like this will stop until we get a recession. That severely limits the opportunity set and makes shorting companies you expect to file especially hazardous.

Our search methods haven't changed too much, but we spend a lot more time on it now, much more than we do on research. The best place to look for distressed investing opportunities is monitoring bankruptcy filings and dockets. Additionally, just reading the news whether it be Bloomberg stories or bankruptcy industry newsletters can give you an idea of which companies are in trouble and where to focus your efforts. The implications going forward are the same as they have been for past downturns: companies that have overextended and levered up will go bankrupt and a lot of junior creditors will be wiped out. While there are certainly a lot of garbage projects in this country that should no longer be funded that we need to deal with, the real action will be in China where their entire financial system

This article was written by

SA PRO Interviews profile picture
This account publishes the weekly PRO fund manager interview, which is available only to PRO subscribers. These are interviews Seeking Alpha authors and fund managers in the industry about their investing philosophy, recent ideas they have published on Seeking Alpha and elsewhere, and their current favorite ideas. The account will also occasionally repost other interviews we have done with authors or investors.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Check with individual articles or authors mentioned for their positions. Green Knight is long DVMT, RESCU and SYCRF.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter. You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. The author is an employee of Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.

Recommended For You

Comments (19)

GrayhawkAZ profile picture
Green Knight-

Any thoughts on Syncora's Q1 figures and recent events (i.e. American Roads sale, NYDFS giving their blessing of the $400 million payment)??

Thanks for the alert on the situation at RESCU. I see it has just reported the recent settlement with Equifirst and that it has settled in principle with four others including HSBC and BMO. Do you have any sense of the magnitude of these? I realize the most substantial opportunities for unit holders are in litigation in Minnesota Federal Court with 11 other parties, which appear to still be on track for resolution by next year.
the chief profile picture
This just sold by Macquarie for $1.2b Cdn with


Sophocles Sophocleous profile picture
By far the best interview I've seen on SA. Thank you Green Knight for sharing.
Long Tail Of Finance profile picture
I never had issues buying Syncora-insured muni debt over past few years (i.e. Detroit bonds), as they knew how to fight in the courts and had the capital to keep P&I paid without a hitch.
I like sycrf , but the ago transaction was for 360 million not 30 million. The 335 million from Greenpoint was already reflected as negative value in loss reserves. This confusing accounting was done exactly like this in The jp morgan transaction of 2014 and Bac settlement of 2012. I sure hope I am looking at this wrong.
Green Knight profile picture
Take a look at the noteholder supplement they published last week which shows a pro forma balance sheet. On slide 9 it shows policyholder surplus declining by $30.9mm related to reinsurance (and then $400mm related to the bond repayment which may be part of the confusion).
It's a bit unclear precisely which mistake you made but:
1. If your $4 starting point was 9/30 adjusted book (GAAP-based): that already had almost all the unearned premium revenue added back in.
2. Alternatively, if you're working solely from the statutory financials, you may have forgotten to adjust the surplus notes back to par.
3. Despite a misleading note in the supplement, Greenpoint was certainly reflected (as negative loss adjustment) in the 12/31 stat financials.
Green Knight profile picture
You're right. I started from the adjusted 9/30 BV that management gave and forgot that they include an add back for deferred revenue and didn't readjust for that going to AGO in the reinsurance transaction. So my range should instead be $9-21.
You should check out Energold Drilling (EGDFF). Totally off the radar but after several years of losing money, return to profitability is coming. Nobody is watching!
iconstockkilledme profile picture
Long term chart looks good on that one for a return to $5 (1500%) but it is not liquid at all. Only trades $5000 per day or so.
Yup, it's thin. Fundamentals improving as exploration is ramping back up in mineral mining after 4-5 years of decline. Sprott and another lender just executed a $2 million unsecured working capital line of credit in order to mobilize more drill rigs that have been idle. They also own 9% of Impact Silver, an active silver miner in Mexico. That could be a leveraged plus if silver prices break higher.
iconstockkilledme profile picture
Sadly the days of "distressed investing" are gone forever. The Federal Reserve is buying SPX futures in the overnight constantly to keep a bear market from developing, mainly because pension funds must have constant upward movement in stocks to be solvent.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

More on SYCRF

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.