Why Invest in HYLD

• Active Management Strategy - Peritus has an active management strategy, picking and choosing only the securities they feel offer the best value with the least credit risk. With this strategy, Peritus strives to avoid many of the highly leveraged buyouts (LBOs) which dominate the high yield indexes and index-based products and, in their opinion, are likely to be impaired over the next few years.
• Risk Management Strategy - From time to time, HYLD may utilize U.S. Treasuries, long or inverse exchange traded funds, or other tools in an effort to hedge against adverse market declines, in essence producing a “hedged high yield” strategy. For instance, the negative correlation benefit of Treasuries provides an attractive natural hedge and allows the portfolio to profit from the “flight to quality” trade if there is a market disruption. Peritus also employs a sell discipline where downward price moves in certain holdings may trigger a position size trim or sell. These tools can be used to help reduce risk and/or maximize the income stream regardless of the market environment.
• Less Focus on Credit Ratings - Peritus places limited value on rating agencies and their methodologies, believing the agencies lag the market perception of risk, often ignore critical components of a company’s credit profile and historically have put too much emphasis on a business’ size and longevity. Peritus views credit as either “AAA” or “D”: either a company is expected to pay its coupon and principal obligations or it isn’t.
• Disciplined Investment Process - Peritus’ investment ideas and research are generated internally, allowing them to search for value and avoid popular trends. Through their rigorous credit and valuation analysis, Peritus pays particular attention to businesses they see as providing an “essential” product or service, having the ability to generate free cash flow, having a manageable capital structure and/or having hard asset values that are not being reflected in the bond pricing.

About the Portfolio Managers

Timothy Gramatovich, Chief Investment Officer
Mr. Gramatovich, co-founder of Peritus, has over 25 years of experience directly involved in the high yield asset class. As the Chief Investment Officer, he leads the investment committee and is responsible for developing investment strategies, themes, and ideas. Prior to co-founding Peritus, Mr. Gramatovich was a Portfolio Manager with Smith Barney’s Asset Management Division in Los Angeles, where he managed high yield portfolios for high net worth individuals and institutions. He began his career with Drexel Burnham Lambert in 1984, assisting in the development and marketing of high yield corporate debt management products. Mr. Gramatovich is a Chartered Financial Analyst (“CFA”) charter holder and a member of the CFA Institute. He is a graduate of the New York Institute of Finance.

Ronald Heller, CEO & Senior Portfolio Manager
Mr. Heller, co-founder of Peritus, is the Senior Portfolio Manager, overseeing portfolio management and trading activities. Over the past 15 years, Mr. Heller has developed long standing relationships with dealers across Wall Street for new issue and secondary trading. He began his career in finance in 1993 with Smith Barney. Prior to Mr. Heller’s investment career, he had a seven year career in the National Football League with San Francisco, Atlanta and Seattle, retiring in 1993. Mr. Heller attended Oregon State University majoring in Kinesiology.