The Intrepid Income strategy invests primarily in US corporate bonds and seeks to protect and grow your capital by generating strong risk-adjusted returns and high current income.
Is This Strategy for You?
an investment horizon of at least 3-5 years and minimum investable assets of $3 million.
exposure to high yield and investment grade corporate bonds without taking significant default or interest rate risk.
seeking a portfolio with differentiated holdings and a low correlation to market indexes.
maintain a long-term focus and tolerate underperforming the major indexes in the short run.
The Income strategy is the predecessor to the Intrepid Income Fund and is managed with the same objectives and constraints. Its goal is to generate current income and an attractively higher yield than comparable maturity US Treasury securities by investing primarily in high yield corporate bonds while avoiding incurring a significant risk of default.
While the strategy does invest in investment grade debt and larger issues, generally the securities in the portfolio are part of smaller issues of less than $500 million. We believe our size is an advantage in this area, as many bond managers are too large to invest in these issues, which can create attractive mispricing opportunities.
Our approach to fixed income is intensely focused on downside protection and risk control. We will only invest when we believe we are being well compensated relative to the risk taken.
Frequently Asked Questions
We want to own businesses that are understandable and that we can value with a high degree of confidence. These companies are typically mature, established leaders in their industries, generate consistent cash flows, have strong balance sheets, and are run by management teams with a history of adding value and acting in the best interests of shareholders and bondholders. Often, the bond prices of these companies become depressed when the market unfairly punishes them for issues that we believe are temporary or fixable, which creates an opportunity for us to buy at attractive yields.
We are content to hold cash and high-quality investment grade corporate bonds if we cannot identify enough attractive high yield opportunities to be fully invested. Cash levels have historically been higher after strong bond market gains and lower following steep market declines and periods of volatility.
Portfolios are relatively concentrated and typically own between 20 and 50 holdings, including high yield bond issues of 10 to 40 companies. We believe this allows our highest conviction ideas to contribute meaningfully to performance while still providing adequate diversification.
Fixed income securities are typically exited either at maturity or when the price is too high and the yield too low to be supported by business fundamentals.
For more information on Intrepid Capital's Separate Accounts, contact Tommy Isaacs at (904) 242-5071.