Waterfall Asset Management is an advisory firm with just under $9 billion in assets under management (AUM). The firm has around 70 advisors that maintain relationships with roughly 40 clients, including pooled investment vehicles, retirement plans and insurance companies. The firm currently does not have any individual clients. If you’re looking for an advisor firm that works with individual clients, try our financial advisor matching tool.
Waterfall Asset Management, which is headquartered in New York City, is a fee-only firm. This means that all of its earnings come from advisory fees paid by clients. Conversely, a fee-based firm may earn income from additional outlets, such as insurance and securities commissions.
Waterfall Asset Management Background
Co-managing partners Thomas Capasse and Jack Ross founded Waterfall Asset Management in 2004. The duo remains the firm’s principal owners to this day. Capasse and Ross, along with chief financial officer (CFO) Brian Breakstone, chief operating officer (COO) Crager Boardman and chief technology officer (CTO) Ronen Rub, round out the firm’s management team.
There are 70 advisors employed at the firm, many of whom have earned professional certifications such as chartered financial analyst (CFA) or certified public accountant (CPA).
What Types of Clients Does Waterfall Asset Management Accept?
Waterfall Asset Management currently works with roughly 40 clients, which is a relatively small number of clients for a firm with 70 advisors. That may be because the firm works only with large institutional clients. Half of its client base is comprised of pooled investment vehicles, while the other half includes a range of investment companies, retirement plans, insurance companies, government entities and corporations.
Waterfall Asset Management Minimum Account Sizes
Waterfall Asset Management generally requires at least $1 million in investable assets. However, the firm may also waive this minimum at its own discretion.
Services Offered by Waterfall Asset Management
The hallmark offering at Waterfall Asset Management is its investment management services, which it provides to private investment funds, separately managed accounts (SMAs), real estate investment trusts (REITs) and other clients.
The firm specializes in investment advice regarding less conventional securities. These might include asset-backed securities, consumer and commercial performing and non-performing loans, residential and commercial mortgage-backed securities, privately negotiated new issue assets, small-balance commercial mortgage loans, investments in pools of loans and private equity.
Waterfall Asset Management Investment Philosophy
There are four key elements to the investment philosophy at Waterfall Asset Management, according to the firm’s Form ADV:
- developing trading ideas based on evaluating available information or negotiated transactions sourced from firm relationships or analyses
- executing cash flow stress testing and due diligence
- reducing market risks through conservative leverage and hedging strategies
- reducing downside risk related to unanticipated events by frequently evaluating collateral pool performance and proactively managing investment positions
The firm generally starts its investment process by examining sectors in which issuers have been experiencing distress. From there, the firm will conduct analyses to screen for securities with a higher ratio of credit support to expected credit loss. Finally, the firm will conduct legal reviews and other due diligence before actually making investments.
Fees Under Waterfall Asset Management
Advisory fees at Waterfall Asset Management can vary in scope and size from one client to the next, so there is no set schedule of fees. Many of the private funds that the firm works with pay quarterly fees of between 0.375% and 0.4375% of the value of their assets.
What to Watch Out For
For certain client accounts, Waterfall Asset Management will charge performance-based fees. The firm’s Form ADV goes into more detail, stating, “Performance-based compensation may create an incentive for Waterfall to make investments that are riskier or more speculative than would be the case in the absence of a performance fee. To the extent a particular investment is suitable for clients, such investment will be allocated on a basis which Waterfall believes is fair and equitable for all clients, based upon each client’s respective investment guidelines.”
Keep in mind that Waterfall Asset Management is a fiduciary, which means it has a legal obligation to always act in the best interests of its clients.
Waterfall Asset Management has no disclosures to its name, meaning it has a clean legal and regulatory record in the eyes of the U.S. Securities and Exchange Commission.
Opening an Account With Waterfall Asset Management
You can get in touch with Waterfall Asset Management by filling out the contact form provided on its website. The form requests your first and last name, email address and a brief message or question. If you’d prefer to reach the firm by phone, you can do so at (212) 257-4600.
Where Is Waterfall Asset Management Located?
Waterfall Asset Management is headquartered in the Midtown neighborhood of New York City, across the street from Rockefeller Center.
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