Approach OG | Cottonwood Site

Our Investment Approach

Cottonwood Capital Group seeks to capitalize on information asymmetry, complexity, and technical issues that are not well followed or understood.

Our focus is to identify mispriced securities and determine the reason for the off-market sentiment with the goal of investing opportunistically in the optimal part of the capital structure.

The foundation for our investments begins with a disciplined, bottom-up business analysis and research process.

We focus on finding businesses with strong leadership, attractive industry life cycles and competitive positioning, sustainable free cash flows, and defensible business models. After identifying the best opportunities, we use quantitative screening and relative value assessment to invest with the mandate to deliver net returns across sectors, strategies, and maturities.

Liquid Credit

BROADLY SYNDICATED
LOANS & BONDS

Investing in a diversified portfolio of liquid securities, including senior secured loans and high yield bonds.

Direct Lending

PRIVATE PLACEMENT
SENIOR SECURED LOANS

Targeting first lien and unitranche investments in middle market, sponsor-backed companies.

Opportunistic Credit

CREATIVE & FLEXIBLE
FINANCING SOLUTIONS

Pursuing proprietary investments across the capital structure, ranging from senior secured debt to structured equity investments.

Our Research Process

1) Fundamental Analysis:

Our process begins with bottom-up financial modeling, including industry analysis, multi-scenario business forecasting, channel analysis including risk exposures, competitive advantages and attributes, and key stakeholder quality and incentives.

2) Security Analysis:

This includes legal covenant review, organizational structure and design, security payment features and rights, and potential capital structure strategies.

3) Market Analysis:

Important to the analysis includes an overall view on cyclical and secular risks and opportunities, catalysts which will converge market perception with ours, and key competitor health and strategies.