Finding Higher Yields in European Distressed Debt with Bowery’s Founder, Vladimir Jelisavcic
Vladimir Jelisavcic, one of the leading speakers discussing higher yields in European distressed debt at the 5th Global Distressed Debt Investing Summit in February, gives some feedback on the great success he has found within his own company, Bowery Investment Management.
Vlad’s niche oriented focus has paved the way in the development of his “Opportunity Strategy.” These smaller investment opportunities in less followed distressed areas, such as middle market loans, trade claims, and infrequently traded bonds, have created the basis for Bowery’s success because larger competitors are unable to access them. Bowery’s small, cohesive team gives it a competitive advantage relative to larger firms.
Another advantage that Bowery has is an internal trade claims sourcing team. With its own vertically integrated unit, Bowery is able to significantly reduce transaction costs and gain access to claims other firms would not be able to reach through a third party. Claims tend to generate alpha for the portfolio, and these opportunities should only expand when default rates rise.
Bowery’s interest in debt outside of the United States has given it a unique perspective on the deleveraging process of European banks. Vlad sees this process as “continuing, but not accelerating,” as many of the momentous changes within the European banking industry have already begun to change the landscape. The implementation of Basel III will further alter European banking regulation standards. European banks will, for the first time, have a single regulator (the ECB), instead of independent state overseers. This shift has created an investment opportunity in certain regional European bank hybrid securities that Bowery expects to be retired at a premium in advance of Basel III implementation. The firm is able to utilize its small size and scale to its advantage in accessing these off-the-run European names.
Bowery is a small firm run as though it were a large one in terms of infrastructure and compliance. By investing a tremendous amount of resources into the management of the company, Vlad ensures that the business runs at the highest standards while using the best practices. When combined with a differentiated portfolio of underfollowed and special situation credits, Bowery is a unique firm. Vlad’s “Opportunity Strategy” continues to adapt to and take advantage of a changing European distressed debt market.
Vladimir Jelisavcic is the CIO and Senior Portfolio Manager of Bowery Investment Management, which he founded in 2012. From 1999 to 2012, he served as a principal of Longacre Fund Management, LLC, an investment manager formerly registered with the SEC, where he managed several private investment funds. From 1993 to 1998, Mr. Jelisavcic was an associate, rising to a vice president, in the high-yield department of Bear, Stearns & Co., Inc., where he traded distressed bank loans and private notes and identified and analyzed investment opportunities in distressed securities. In 1991, Mr. Jelisavcic worked as a law clerk for the SEC in Los Angeles. From 1987 to 1990, he worked in the tax department of Deloitte & Touche. Mr. Jelisavcic was a certified public accountant and has authored articles on trade claims and creditor rights published in the Journal of Corporation Law. He earned a juris doctor cum laude from the University of Iowa College of Law in 1993 and a bachelor’s degree in accounting from New York University in 1987.
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Interview by Jennifer Wiegele of iGlobal Forum