We are always open to new ideas, new thinking and innovative structures — it’s part of our Blue Box approach to investing.
Titan emphasizes small- to mid-sized managers, using these relationships to structure limited capacity co-investment vehicles, opportunistic trades across the credit spectrum, as well as seeding early-stage managers. These opportunities require investment nimbleness and the ability to efficiently deploy capital to take advantage of market dislocation and limited inventory situations.
We have always emphasized sourcing and investing with hedge fund managers in the early stages of their development. In our highest-conviction situations, we will make a larger seed allocation to a manager and structure a revenue share vehicle for the benefit of our investors who seek direct access to that manager.
Continually looking for emerging managers, we often find ideas with significant potential that have yet to launch or reach the capitalization required to attract the attention of larger hedge fund investors. We often provide seed assets to help these managers reach critical mass. When we do, our investors can generate two sources of return: They benefit from the manager’s investment performance, as well as the future asset growth of the manager through a share of their overall fee revenue.
These arrangements often have a high alpha potential, and our investors receive an enhanced IRR through a top-line share of overall fee revenue.
Structured Investment Portfolios
We are regularly sourcing one-off investment opportunities, unique structures and asymmetric trades. Given the breadth of asset classes our team covers, we occasionally see unique asymmetric investment opportunities. These can take the form of a particular trade, theme or instrument type. These situations are generally slightly less liquid but have a higher IRR target with attractive risk/reward asymmetry. In these scenarios, we search for the best investment manager to partner with. We then build customized vehicles to enable our investors to access the opportunity.
Titan’s Specialized Vehicles are predicated on identifying situations where the limited scale of the opportunity tends to exclude the participation of larger players. These vehicles have included structured credit transactions, limited-inventory debt instruments, seed capital for revenue sharing with emerging managers, and one-off trades in high-conviction situations with our strongest managers.
We’ll come together with a select manager in a transparent partnership that provides mutual opportunity for return in a specific deal or trade. Titan has many relationships with external managers that know we have both the skillset and structuring expertise to invest alongside them where they have excess capacity on trades. External managers bring many of these co-investment opportunities to us through the course of the year. Our team underwrites the due diligence and also ensures the opportunity is suitable for existing mandates.
Separately Managed Accounts
Where suitable, Titan has the ability and infrastructure to work alongside an external manager with a managed account. We are then able to invest in these accounts across commingled products or offer them to institutional investors. We utilize managed accounts to enhance our transparency, control, risk management and liquidity. Titan provides access to a suite of hedge funds available through separately managed accounts (SMAs). Titan uses proprietary and third-party software to handle risk aggregation and pricing across the portfolio.
"Warehousing" is essential to collateralized loan obligation (CLO) managers as they bridge asset versus liability mismatches inherent in transactions — but is no longer offered by banks post-2008 due to risk.
Titan Advisors worked with the other investors to minimized warehousing risk by carefully selecting CLO managers and controlling capital scale up, the pool composition, financing terms and placement-process visibility.
Partnering with one of our hedge fund partners, Titan has co-invested in warehouses and generated net internal rates of return between 15 and 20% in under six months.
Case Study: Co-investment in CLO warehousing
To learn more about specialized vehicles, contact our Business Development team.