Our Perspective 5/ 4/ 2020

Capital Corner: Contrarian Investing During a Crisis

NorthMarq has been a steady provider of capital through many cycles over its roughly 60 years of existence. From the Savings and Loan Crisis in the 1980s, the tax reform of 1986-1989, the 1998 Russian Ruble crisis, and the 2009 financial meltdown to name a few, we’ve been able to advise capital providers and borrowers alike through trying times. Most of all, we have learned lessons and best practices from each crisis.

First, we learned from our capital sources and from our borrowers that being “contrarian” has helped them both do well in times of stress and turmoil. History has shown that in the end, when the dust settles, these entities are able to look back and say, “The investments that we made at that time are some of the best in our portfolio.” The best can mean yield, structure or whatever metric is appropriate for them.  The fact is that over the next two quarters, it is very possible there will be excellent buying opportunities available in the marketplace.  NorthMarq stands ready with capital from a variety of sources to help execute those transactions.

Second, a steady hand comes from experienced professionals who partner with innovative next-gen producers. Our offices are comprised of long-tenured leaders who can identify the right structure and source along with the newest advisers who are ready to challenge the norm and push for a new solution. Those two forces coalesce around the best solution for the situation.

Finally, since we are on the front line of this financial challenge, we can gather more knowledge and identify the shifts in the market. That strong foundation gives us the ability to advise our capital providers and borrower clients of “contrarian” investments. To be clear, this is an opportunity for both parties to make a deal in a turbulent market. From taking the pulse of nearly 100 life company lenders to having direct access to the government agencies, our assessment of the capital markets becomes essential when trying to evaluate the buying, selling, refinancing or recapitalization opportunities.

This continued pulse on the market will be important as we all look to be successful even if it requires being “contrarian.”  We’ve learned that each crisis is different but each also will have a silver lining of opportunity that will result in the best investments in your portfolio.