Jonathan Kanterman, Presenter at Golden Networking's Distressed Investing Experts Forum 2010, Interviewed by Institutional Investor

Jonathan Kanterman, Managing Director, Stillwater Capital Partners, Presenter at Golden Networking's Distressed Investing Experts Forum 2010, "Analyzing and Valuing Distressed Companies, Securities and Real Estate" (, September 21, New York, Interviewed by Institutional Investor

New York, NY, September 01, 2010 --( Jonathan Kanterman, Managing Director of Stillwater Capital Partners, presenter at Golden Networking's Distressed Investing Experts Forum 2010, "Analyzing and Valuing Distressed Companies, Securities and Real Estate" (, September 21st, 2010, New York City, was interviewed by Institutional Investor for "Asset-Based Lending Shifts to Owning", on the impact of the credit crunch on Asset-Based Loan (ABL) managers.

"More than 150 asset-based-lending funds that had three-year or more track records, with at least $100 million, are winding down or reorganizing into new funds," observes Mr. Kanterman, Stillwater Capital Partners, which manages ABL hedge funds and an ABL fund of funds. Although current opportunities for asset-based lending have never been better, according to Mr. Kanterman, the financial crisis and subsequent fall in asset values have prompted a distinct shift in strategy from lending against assets toward owning them outright. Stillwater's $450 million in ABL hedge funds is invested roughly 50 percent in loans and 50 percent in underlying assets; before the crisis loans made up about 90 percent of the funds.

Stillwater, which manages $750 million, down from $1 billion at its peak in October 2008, pursued a typical strategy. It focused on loans of less than 12 months to importers and exporters and energy remarketers that were looking for temporary loans against receivables, as well as medium-term loans of 12 to 36 months to law, real estate and life insurance firms against settlement fees, property and life policies, respectively. As with other ABL funds, realized losses were not a big issue for Stillwater. The real problem, says Mr. Kanterman, was that banks pulled credit lines from funds of funds that had invested with Stillwater and other funds; this in turn forced the funds of funds to liquidate their positions. And that created a cascading effect, he explains.

Suddenly, funds of funds were forced to redeem their assets from underlying ABL funds, and not enough liquidity or new money was coming into the individual funds to offset the tremendous outflow. In October 2008, some 25 ABL funds of funds with a combined $4.3 billion in assets reported data to HFN; as of the first quarter of 2010, that number had dropped to five, with less than $92 million in assets. To meet the redemptions, of course, ABL funds hastily sold off their most liquid and desirable loans. Still, that wasn't enough, so to protect investor equity and asset values, many decided to gate their funds, suspend redemptions or even shut down their funds. "Unlike equity managers who can sell off highly traded stocks to meet redemptions, the liquidity of ABL funds is structured along loans of various maturities," explains Mr. Kanterman. "Even in a stable economic environment, positions can't be quickly unwound, especially longer-term real estate assets."

Distressed Investing Experts Forum 2010 is produced by (, the premier networking community for business executives, entrepreneurs, investors and diplomats, founded by former McKinsey consultant and Columbia Business School MBA Edgar Perez.

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