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ABOUT

Callodine Capital Management, LP (“Callodine”) was formed by James Morrow in 2018. Callodine manages investment products with a long/short strategy, which target the dividend paying equity universe. This opportunity set focuses on cash-generative, mid to large cap companies across a diverse set of industries. In addition to core dividend paying equities, this universe includes differentiated equity income niches like Business Development Companies (BDCs), Master Limited Partnerships (MLPs), Real Estate Investment Trust (REITs), and special situations like Mergers & Acquisitions (M&A), spin-offs, convertibles, preferreds, and high yield. This target universe also has a distinct investor base, characterized by high retail-ownership and siloed active investors which can create predictable behavioral biases and stock dynamics.

BELIEFS

Callodine believes that equity income investing is not about chasing yield. It is about seeking total return by paring dividend yield with a strong valuation discipline, earnings growth and an understanding of the key sentiment drivers that creates powerful alpha generation on long and short investments.

 

STRATEGY

Callodine's investment strategy combines a quantitative approach, with a deep fundamental research process and a behavioral bias overlay. Callodine seeks a total return strategy, with alpha-driven equity upside combined with current income, downside protection, and a low correlation to typical long/short strategies.

Market Insights

MARKET INSIGHTS

MARKET INSIGHTS

January 2020
Market Insights

This piece focuses on the scarcity of cash yield globally, the challenges this creates for asset allocators, and the opportunity we believe this leads to within the yielding equity universe.

Specifically, it covers the following:

  • Despite the four-fold growth in debt over the last 20-years, there has been no increase in absolute cash yield available from bond markets as yields have collapsed globally.
  • Given this starting point on rates, forward returns from bonds are likely to be very disappointing versus historical results, and investors are increasingly being forced to push out the credit risk spectrum in search of sufficient cash yield.
  • This behavior is moving into equities as well, and we believe will significantly reshape the equity markets over time as investor preferences shift.
  • To date, investor focus has been on “low-volatility” sources of equity income, but we believe this will broaden out and there will be an opportunity for stocks that have a better combination of yield at a reasonable price (YARP) and superior growth prospects versus “low-vol” names.
  • We believe strategies that use an active, highly risk-managed/hedged approach to sourcing cash yield from equities will become an increasingly popular way to deal with a scarcity of cash yield globally.
Contact Callodine Capital

CONTACT

CONTACT

CONTACT US

Callodine Capital Management, LP
Two International Place
Suite 1830
Boston, MA 02110

GENERAL INQUIRIES

617.880.7480
ir@callodine.com

Callodine Capital Management, LP