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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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CrossingBridge Advisors 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (CrossingBridge Advisors)

Primary Source Intelligence • Q3 2023 Letter Analysis

CrossingBridge Advisors Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, CrossingBridge Advisors. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Positioning StanceConstructive

GeographyUS

Digest Analysis

Quick Take

"CrossingBridge advocates disciplined credit selection over chasing fat pitches. The firm outperformed Treasuries through active management while reducing energy E&P exposure and focusing on single-A CMBS."

Executive Summary

CrossingBridge's Q3 2023 commentary emphasizes disciplined credit selection over chasing perceived opportunities. Manager David Sherman argues that apparent fat pitches like short-term Treasuries and distressed investing often have hidden risks or limited upside. The firm outperformed Treasury securities over the past year through active management and spread premium capture. Sherman expresses skepticism about current distressed opportunities, noting most candidates are either venture-like businesses or mature zombies. In energy, the manager has reduced E&P exposure due to rising leverage and M&A activity, though selectively invests in event-driven situations. The firm focuses on single-A CMBS not exposed to central business districts and avoids lower-rated CLO tranches. Private credit growth is viewed cautiously, with concerns about untested default assumptions and false stability from lack of mark-to-market pricing. The strategy emphasizes methodical analysis of individual credits, accepting corporate credit risk while taking advantage of high short-term rates and acceptable spreads to generate consistent returns.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

Manager demonstrates high conviction through detailed analysis of specific holdings like NGL Energy with precise position sizing, entry prices, and yield calculations. Clear thesis articulation for individual credits and willingness to sell when thesis changes (FXI Holdings) shows strong conviction in decision-making process.

Growth Outlook

38%

BearishBullish

Neutral (38%)

Manager expresses cautious skepticism about perceived opportunities across multiple markets. Describes distressed investing as lacking quality opportunities, energy sector as potentially repeating negative cycles, and private credit as overhyped. However, maintains constructive view on selective credit opportunities.

Risk Appetite

43%

DefensiveAggressive

Balanced (43%)

Portfolio positioning shows selective risk-taking with net selling of E&P credits and focus on higher-quality CMBS tranches. Manager demonstrates willingness to sell positions when risk-return profile deteriorates, indicating measured risk appetite rather than aggressive deployment.

Capital Deployment

38%

De-riskingDeploying

Net Neutral (38%)

Manager describes being a net seller of E&P credits and selling positions like FXI Holdings and Georg Jensen. While some selective additions were made (NGL Energy bonds), the overall activity suggests modest de-risking rather than aggressive deployment.

Forward Guidance

45%

CautiousExpansionary

Neutral (45%)

Manager plans to continue methodical, disciplined approach rather than aggressive deployment. Emphasizes patience and selectivity, with intention to wait for proper opportunities rather than chase current market themes. Tone suggests cautious monitoring rather than active deployment bias.

Language Signal

40%

BearishBullish

Balanced (40%)

Language is dominated by cautionary terms like skepticism, concerns, risks, and warnings about various market segments. While some opportunities are mentioned, the overall tone emphasizes avoiding pitfalls rather than embracing bullish themes.

Perceived Risk

68%

Low RiskElevated

Elevated Risk (68%)

Manager identifies multiple specific risks across sectors including untested private credit assumptions, energy sector cyclical risks, commercial real estate stress, and inverted yield curve concerns. Detailed discussion of risk factors in each market segment indicates elevated risk perception.

Opportunity Density

35%

ScarceAbundant

Selective (35%)

Manager explicitly states skepticism about current opportunities across distressed investing, energy E&P, and private credit markets. Emphasizes selectivity and patience, suggesting limited attractive opportunities in current environment despite some selective investments.

Time Horizon

68%

Short-TermLong-Term

Multi-Year (68%)

Manager discusses multi-year healing process for commercial real estate and long-term cyclical patterns in energy sector. Investment approach emphasizes patience and methodical analysis rather than near-term catalyst dependency, indicating medium to long-term investment horizon.