Venk Reddy: How do you engage with management teams?
Published on October 27, 2022
In this video, Venk Reddy, CIO of Sustainable Credit, explains the differences between how ESG fixed income managers and equity managers engage with their portfolio companies.
Transcript
So, we've been doing fundamental investing in bonds for a really long time, and the way you engage with management teams as a fixed income investor is different than the way you engage with management teams as an equity investor. With respect to ESG, I'm not sure that ESG risks materially change whether a company's willing to engage with you theoretically, but what we found is that management teams are actually really excited to engage with us when we reach out to them, for a variety of reasons. Number one, a lot of fixed income and a lot of corporate credit in particular doesn't necessarily have publicly traded equity, so they're not used to answering or talking about ESG risks with investors in general. And a lot of them are really excited to talk about that with their investors. They may not publish on it because they might be a small company and it's just not something that they're able to handle in the way that a very large multinational corporation could, but it doesn't mean they're not doing anything. And so, they're really excited to engage on that front. The other is, quite frankly, as a bond investor, you can encourage companies to take certain actions, you can ask them to consider risks that they may not be considering before, but we don't have the vote like the equity does to punish them without... other than taking away our capital, to punish a company for behaving a certain way. And there's a certain amount of exhaling that happens when the consequences are more related to whether we remain invested versus whether we're going to vote to vote in a certain way at a shareholder meeting.
Featuring
Venk Reddy
Chief Investment Officer – Sustainable Credit
Venk Reddy joined Osterweis Capital Management in 2022 as part of the Zeo Capital Advisors team transition. Prior to founding Zeo Capital in 2009, Mr. Reddy was a co-founder of Laurel Ridge Asset Management, a multi-strategy hedge fund, where he managed the credit, distressed, and event-driven portfolios. Previously, he structured derivative products and was head of delta-one trading as a portfolio manager within Bank of America’s Equity Financial Products group (EFP). Mr. Reddy also managed investments in event-driven situations, convertible instruments, and options at Pine River Capital Management and HBK Investments, where he started his career.
Mr. Reddy is a principal of the firm and a Portfolio Manager for the sustainable credit strategies. He is also a portfolio manager for the growth & income and flexible balanced strategies.
He currently serves as a Trustee of Lick-Wilmerding High School in San Francisco. He previously served as a Trustee and officer of the Katherine Delmar Burke School in San Francisco.
Mr. Reddy graduated from Harvard University (B.A. in Computer Science with Honors).
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