Jim Robinson, CEORobinson Capital was founded ten years ago by Jim Robinson, a veteran investment manager and bond trader with four decades of fixed income experience.
“I spent the first thirty years of my investment career fighting for basis points managing traditional fixed income strategies. Our alternative yield strategies have visible alpha opportunities of four percent or more. That’s a value-add proposition to our fixed income-oriented clients that I can get really excited about,” says Robinson, CEO, Robinson Capital.
Shortly after forming the firm, he convinced a couple of his former fixed income colleagues, Greg Prost and Tal Gunn, to join him. Together, they have grown Robinson Capital to a $1.2 billion alternative yield manager.
“Our goal is to provide our clients with a higher yielding mattress,” says Robinson.
Closed-End Fund (CEF) Arbitrage
Robinson Capital manages two mutual funds: Robinson Tax-Advantaged Income Fund (ROBNX) and Robinson Opportunistic Income Fund (RBNNX) that arbitrage tax-exempt and taxable credit closed-end funds, respectively. Both funds offer daily liquidity, invest in closed-end funds, and hedge away much of the interest rate risk. The net result is to isolate the outsized income distributions that closed-end funds offer, as well as the discounts-to-net asset value they typically trade. Over the past five years the funds exhibited the following characteristics:
Robinson Tax-Advantaged Income Fund
Income Generation: the fund has historically generated an attractive income stream
Hedged Interest Rate Risk: About 80% less than the overall interest rate risk of the Index
Discount Opportunity: 7%, or more, upside potential that doesn’t exist in traditional bonds
Robinson Opportunistic Income Fund
Income Generation: the fund has historically generated an attractive income stream
Hedged Interest Rate Risk: About 80% less than the overall interest rate risk of the Index
Discount Opportunity: 7%, or more, upside potential that doesn’t exist in traditional bonds
In both cases, the mutual funds typically offer higher yields than are available from comparable traditional fixed income funds. The hedged duration minimizes any permanent impairment that could result from rising interest rates. Most importantly, both funds offer meaningful upside potential from the closed-end funds’ current discounts—an opportunity that simply does not exist with traditional bond strategies.
Pre-Merger SPACs
Special Purpose Acquisition Companies (SPACs) have been widely disparaged by the financial media over the past 12-18 months. However, this is because the media has primarily focused on the “post” merger behavior of SPACs. Upon completion of a merger, a SPAC is simply an equity. “Pre” merger SPACs, for all intents and purposes, are bonds. They have a redemption date (typically no more than 24 months out) and a fully collateralized redemption value (all of the SPAC IPO proceeds are required to be placed in a trust, which is further required to invest in T-Bills and/or Treasury Money Market funds). In the current environment, Robinson Capital is able to purchase pre-merger SPACs at a four percent annualized discount to the current trust value. The pre-merger SPAC strategy has the following characteristics:
I spent the first thirty years of my investment career fighting for basis points managing traditional fixed income strategies. Our alternative yield strategies have visible alpha opportunities of four percent or more. That’s a value-add proposition to our fixed income-oriented clients that I can get really excited about
● Discount to Trust—in the current environment, pre-merger SPACs can be purchased at annualized discounts to trust value of approximately 4 percent.
● Trust Yield—pre-merger SPACs are required by prospectus to place all of the SPAC IPO proceeds into a trust, which must be invested in T-Bills or Treasury Money Market Funds, both of which are offering annualized yields in excess of 4.5 percent.
● Absolute Return—the combination of an attractive discount to trust value, plus the current yield of the trusts (they are invested in T-Bills and/or Treasury Money Market Funds), could generate attractive returns with the credit and interest rate risk of T-Bills.
Deposit-in-Place Program
Recently, investors have been reminded that bank deposits, particularly any amounts above the $250,000 FDIC insurance level, can have risks. To offset those risks, “Robinson Capital offers to many of its institutional clients a deposit-in-place program it has developed in partnership with a third-party provider,” says Robinson. The program offers the following characteristics:
● Fully Insured—the program limits all investments to no more than the $250,000 FDIC insurance.
● Liquidity—the assets are placed in overnight accounts that allow for daily liquidity.
● Yield—investments are made in financial institutions offering the highest overnight interest rates.
Robinson Capital’s team of experienced bond managers have developed three truly unique alternative yield strategies that offer interest rate risk protection, liquidity, competitive yields and upside potential that simply isn’t available with traditional fixed income strategies.
