Jeffrey Gates’ Gates Capital Management’s Return, AUM And Holdings

Jeffry Gates’ Gates Capital Management is an event-driven alternative asset manager founded back in 1996, which managed around $2.69 billion on a discretionary basis at the end of 2016. Besides being its founder, Jeffrey Gates is the current President and Portfolio Manager of the fund, whose headquarters are in the Big Apple. Before launching his own fund, he was a director at Schroder & Co., where he was concentrating on high yield bonds and post-restructuring equities; and, prior to being promoted to director, he worked at the same company as a high yield bond research analyst and as a high yield salesperson. The very beginnings of his career were at Kidder, Peabody & Company, where he was also a high yield bond research analyst. Aside from being a successful investor, Jeffrey Gates is also known for his philanthropy and was prized with the Golden Heart Award for Outstanding Volunteerism from Gods Love We Deliver. He graduated with a BS in Finance from Kansas State University and with an MBA from the Wharton School, University of Pennsylvania.

Gates Capital Management employs an event-driven investing strategy, which means that the fund tries to benefit from brief stock mispricings that can happen prior to or after a corporate event occurs. Under the term ‘corporate event’ many structural changes within a company can be included, such as mergers/acquisitions, spin-offs, restructurings, bankruptcy, to name a few. This type of strategy is very demanding and asks for a team of experts to conduct a series of professional and detailed research. Besides being challenging, this strategy can be quite lucrative, as is for Gates Capital Management, whose ECF Value delivered averaged annualized gains of an impressive 17.5% a year since its inception (1996) through 2011. In spite of an amazing annualized return throughout the course of 15 years, ECF Value was hit by the 2008 market crisis when the fund lost 38%. Nevertheless, those faithful investors who continued to invest with Gates Capital Management must have been satisfied with its choice, as the fund managed to achieve an eye-popping return of 131% in the following year. Let’s examine the fund’s performance furthermore.

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