Brigade Capital Management, LP is a hedge fund located in New York. The entirety of Brigade’s client base is comprised of institutional clients, most notably pooled investment vehicles - its own funds - and retirement plans. That means that it's not like a traditional financial advisor that offers investment management and financial planning to individuals.
Brigade Capital Management Background
Patrick Kelly and Donald Morgan III opened Brigade Capital Management in 2006. Today, Morgan acts as the firm’s principal owner, managing partner and chief investment officer (CIO), while Kelly no longer works here.
Brigade Capital Management Client Types and Minimum Account Sizes
As Brigade is a hedge fund, it should come as no surprise that its most primary "client" type is pooled investment vehicles - the funds that it manages. This specifically refers to private investment funds, collateralized loan obligation (CLO) and collateralized debt obligation (CDO) funds, separately managed accounts (SMAs), joint venture arrangements (JVs) and more. The firm also has some institutional clients, such as retirement plans, government entities, investment companies, sovereign wealth funds and businesses.
On a firm-wide basis, Brigade Capital Management does not have a specifically set account minimum. However, should you decide to invest in any of the firm’s funds, be prepared to encounter subscription minimums that vary from fund to fund. These minimums are sometimes negotiable, but the firm does explicitly state in its Form ADV that these accounts “involve significant minimum investments.” Also note that individuals wishing to invest in hedge funds must qualify as accredited investors, which requires a high income or net worth.
Services Offered by Brigade Capital Management
Brigade Capital Management specializes in discretionary investment advisory and sub-advisory services. The firm applies its investment strategies to the portfolios of the funds and other clients it works with. Note, though, that the firm explicitly states in its Form ADV that it won’t tailor its services to those who invest in the funds, nor is it open to investment restrictions that investors might impose.
Brigade Capital Management Investment Philosophy
When managing its funds and institutional accounts, Brigade Capital Management utilizes a plethora of investment strategies. In fact, there are seven available philosophies that all use different techniques to garner returns:
- Leveraged capital strategies: These multi-asset long/short strategies focus on issuers with below investment grade debt obligations or securities trading at high yields.
- Credit strategies: Investments used in this strategy include variations of secured loans, unsecured loans, secured bonds, unsecured bonds and more.
- Distressed investing: These portfolios utilize distressed debt investing, leveraged and distressed equities, short positions in imminent bankruptcies, post-reorganization equities and more.
- Arbitrage/derivative strategies: This is a multi-strategy ideology that uses shorter maturity bonds versus CDs, longer maturity bonds versus CDs, matched maturity bonds versus CDs and more.
- Structured credit strategies: This unsurprisingly invests in structured credit instruments. These specifically involve long and short positions in the U.S. and European high-yield and investment grade indexes.
- Energy strategies: These strategies look for long and short bond, bank debt and equity opportunities in the energy market sector.
- Aviation strategies: Portfolios using this will include investments in aviation-linked securities, such as mechanical parts and lease equity.
Fees Under Brigade Capital Management
When it comes to Brigade Capital Management's institutional clients and the accounts of those who invest in its funds, fees are negotiated on an individual basis.
Brigade charges its investment funds management fees based on the amount of AUM in each fund. Annual fee rates range from 0.30% to 1.50%. Certain funds that Brigade manages are not subject to these charges, though. Fees are charged on a quarterly basis, in advance, based on the value of the fund's assets on the first day of the quarter. Under certain circumstances, these fees may instead be charged in arrears.
For some of its funds, Brigade Capital charges a 15% to 25% performance-based fee. This is based on the overall net profits of the funds. Again, certain funds may not be subject to these charges.
What to Watch Out For
Brigade Capital Management does not have disclosures on its SEC record.
Certain clients of Brigade Capital Management will have performance-based fees included their client agreement. The firm states in its Form ADV that this charge may lead the firm to “favor one Advisory Client over another Advisory Client in allocating investment opportunities or otherwise.” While this represents a potential conflict of interest, the firm is bound by fiduciary duty, legally forcing it to act in your best interest.
Opening an Account With Brigade Capital Management
The best way to get in touch with Brigade Capital Management is to call the firm. If you prefer to speak over email, feel free to reach out that way as well. More information can be found on the firm's website.
All information is accurate as of the writing of this article.
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