BACK TO THE BEGINNING –
ACHIEVING STEADY RETURNS – THE CORE OF GARRINGTON CAPITAL’S MISSION
At the heart of our mission is a simple belief: we can achieve 8-12% annual returns without ever experiencing a rolling 12-month period of negative performance. This is not just an investment objective—it’s the foundation of why we do what we do. In a world of uncertainty, we aim to deliver something rare: consistency and stability.
I have a 31-year history in asset management. I began in the long-only space as a discretionary portfolio manager and spent over 15 years managing and distributing hedge funds.
My key takeaways:
a)I genuinely hate losing investors’ money;
b)It’s hard to predict the future; and
c)I believe that this investment strategy offers better risk-adjusted returns (not necessarily better returns) than anything else I have offered investors in my career.
Our private credit strategy isn’t a response to market trends; it’s a solution to a long-standing problem.
Many investors want reliable returns that are uncorrelated to the stock market. They want growth without constantly worrying about the next market correction.
We believe private credit – and specifically, senior secured lending – offers a unique answer to this demand.
We create a predictable income stream that aligns with our 8-12% return target by lending to well-vetted businesses with strong fundamentals.
Unlike equities, where valuations can swing wildly, we focus on generating steady cash flow through disciplined lending practices.
The simplest approach is often the best approach
We provide senior secured (almost always 1st lien) loans, lending against the liquidation value of tangible assets. Here’s how we ensure both downside protection and reliable returns:
- Advance Rates: We carefully set advance rates against the liquidation value of the assets we lend against. This conservative approach ensures a buffer is always in place, protecting our capital even in adverse scenarios.
- First-Position Liens: Our loans are secured by first-position liens on tangible assets. This means we have the first claim on these assets in the event of liquidation, significantly reducing risk for our investors.
- Comprehensive Collateral: In addition to tangible assets, we take liens on the operating business or borrowers’ broader assets. This approach diversifies our security and adds additional layers of protection.
- Covenants for Oversight: We implement strict covenants to monitor and guide the borrower’s operations. These covenants ensure transparency, mitigate risks and maintain the financial health of the businesses we partner with.
By adhering to these principles, we create a portfolio that prioritizes capital preservation while achieving our return objectives. This disciplined lending process is the backbone of our strategy and the key to our consistent performance.
Toreigh Stuart
Managing Director
