by Yieldstreet | Staff
On the second installment of a better know a Yieldstreet team member, we chatted with Christopher Nutt, CFA, CAIA, the Director of Portfolio Management and Restructuring. Chris explains his unique role, the importance of staying active in the due diligence process, and the first international trip he plans to take post-COVID.
How did you get started in the investments space?
A majority of my institutional investing experience was developed working at J.P. Morgan’s Investment Bank. During my tenure at JPM, I progressed to a credit portfolio function and ultimately into their Special Credits Group where I was responsible for managing the firm’s capital in stressed and distressed situations. I was fortunate to work on some very large and complex investment restructuring cases. I also oversaw a portfolio of distressed and reorganized debt and equity investments with a team of analysts.
What is your role at Yieldstreet?
Essentially I operate as a portfolio risk manager across Yieldstreet’s entire book of business with a specialization in restructuring. As our asset class heads conduct their due diligence and look to bring offerings onto the platform, my job is to take a step back and look at how each deal impacts Yieldstreet’s entire portfolio of offerings. I also work alongside our asset class groups to identify and monitor risks along with a team of talented individuals. If one of our offerings has a performance issue, I get involved to help workout the best outcome available in that given situation. Additionally, I take the lessons from my previous restructuring and liability management experience and apply them when we are reviewing new potential offerings.
How do you think about portfolio management? And do you have an overarching philosophy on managing risk?
My philosophy regarding portfolio management and managing risk is to view risk through various lenses. For example, bottom up – company/asset specific and top down – sector/industry, geography, and regulatory analysis. Then seek to understand the dispersion of outcomes that might occur, look to identify issues early, evaluate and implement ways to mitigate those issues. That also means having an understanding of intrinsic value and the downside scenarios.
Do you see a lot of similarities between COVID-19 and the financial collapse in 2008?
Both crises shared economic similarities in regards to uncertainty creating a collapse, increased correlations and volatility, but also had some major differences regarding the policy response to limit the shock, the timing and shape of the market recovery, and revealed how dependent mature economies are on inputs produced in other countries.
In the early days of COVID-19, we saw companies scramble to access liquidity – drawing down on credit facilities across the board. A key difference was that during the Global Financial Crisis, companies were afraid the banks were going to fail. However, during COVID-19 the banking system was much better capitalized and equipped to withstand a crisis through various actions taken since 2008, such as bank stress testing requirements to set capital ratios. Also, a proactive Federal Reserve took actions much faster as compared to 2008 – such as launching a program to buy corporate bonds that put a floor into a lot of credit situations and resulted in stemming a systemic risk contagion from overtaking markets.
However, this level of stimulus was unprecedented and we’ll have to see how this evolves in the future, what unintended consequences will follow, and how this might create market dislocations in the future.
How were you impacted by the events of 2008?
I saw firsthand what a downturn could do to the economy and financial institutions. At the time, I was at J.P. Morgan, which was a fortress in a storm. One lesson that stuck with me is that when the market gets extremely volatile and systemic risk appears, that is when clients need you the most. They will remember that you were there for them in the darkest days and not just during the good times. That applies to investing as well, when stress events occur, that is the time to be disciplined and lean into the right situations.
Do you have someone (teacher, parent, boss) who helped shape how you think about investing or investment strategies?
Too many to name.Throughout my career, I’ve worked with many talented people across a wide range of investment situations – co-workers, business heads, company executives, financial advisors, lawyers and other market participants. During these interactions, I tried to understand others’ investment theses, what they liked and didn’t like about an opportunity or situation, the issues they were concerned about, and how these issues could be fixed or mitigated. Through those various interactions, I ultimately shaped and developed my own investment style and investment decision-making skills.
What effects will crowdfunding platforms like Yieldstreet have on distressed markets or in distressed investing in general?
I think there’s a lot of opportunity for Yieldstreet to provide our investors innovative access to distressed managers and opportunities across a number of different strategies and asset classes over time. As we continue to show that we can bring very flexible and dynamic sources of capital, I believe the market will continue to recognize the value that a platform like Yieldstreet can bring to distressed investing.
Are you saying that position is in terms of the speed at which we can raise capital relative to other people having to go through a longer fundraising process?
Yieldstreet is creating a link to an expansive amount of capital – potentially in the trillions — so we are a conduit for a huge source of investment funds that can be channeled. In my view, that is the enormous impact of Yieldstreet. And depending on how the future evolves, as we continue to be successful in harnessing the power of the retail market by creating a unified connection point, that’s how individual investors can get better access to investment flow and economics, which could help create a flywheel effect. For example, the more Yieldstreet can do in terms of raising capital, the more capital seekers want to work with Yieldstreet, the better access individual investors will have to these managers and strategies.
Favorite books, TV shows, or other medium of choice…What’s your poison?
Market Wizards is a classic read. I find it fascinating that every investor’s psychology and perspective is vastly different from one another. I am also curious about business thought leaders — I’m currently reading books about Blackstone and Amazon.
How else do you enjoy spending your time off?
I enjoy spending time with my wife and family. We have been doing a lot of road trips through New England and we have seen Acadia National Park, Portland, ME; Newport, RI; Martha’s Vineyard, Nantucket, and Cape Cod.
What’s the first place you’re going when international travel starts up again?
France. I was invited to a wedding there for 2022, and I look forward to going there for the first time.
Anything you’re particularly proud of in your career?
I’m proud, fortunate and grateful that I was able to continuously grow, stretch, and evolve into new roles. My career has been one of continuous learning and development. I’ve obtained a number of certifications along the way including the CFA, CAIA, and CIRA designations, which stands for Chartered Financial Analyst, Chartered Alternative Investment Analyst and Certified Insolvency Restructuring Advisor respectively, plus I did a master’s in Risk Management at NYU Stern while working full-time. I’m also passionate about mentoring, coaching and developing junior talent, particularly people that want to do a career transition into a credit/investing role.
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