Tim Ruberti, Managing Director and Portfolio Manager at First Eagle Investments, joined Keith Black, Managing Director of RIA Channel, to discuss how the firm invests both in private credit and public debt securities.
Napier Park is a $21 billion alternative credit manager owned by First Eagle Investments. AUM includes $14 billion in collateralized loan obligations (CLOs), $2 billion in real assets, and $5 billion in credit. In addition to investing in private credit since 2015, Napier Park is a liquidity provider that will purchase publicly traded investments during times of wider spreads and dislocated markets.
Ruberti is a member of the team that invests in both private credit and public mortgage securities in the residential real estate market. Having the flexibility to invest both in public and private markets allows the firm to profit from differences in cyclicality in the two markets. Ruberti notes that there continues to be a shortage of single-family homes in the US and demographic trends are likely to extend this shortage. The millennial generation is starting families and seeking to purchase single-family homes. Trends in household formation show that the US has a shortage of 3 to 4 million homes, a deficit that has been growing since the global financial crisis (GFC). In addition, 87% of residential mortgages have rates below 5%, which locks homeowners into their current home, keeping supply low in the resale market.
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