Knighthead Capital Management LLC disclosed in a filing on December 31, 2018 that it increased its stake in Spirit MTA REIT

Mar 04, 2019
Institutional Holdings Changes
Background Information
Knighthead Capital Management uses a variety of investment strategies and has broad and flexible investment discretion. In general, the firm employs a fundamental, bottom-up investment. Their primary strategies include Distressed/Stressed Investing and High Yield Investing. The funds may invest a variety of distressed assets including senior bank debt, senior notes and subordinated notes. Other investment instruments may include trade claims or other claims, liquidating trusts and litigation trusts. The focus of the funds’ distressed investments is on US and OECD countries. The funds may invest in companies in other countries, but these investments generally are limited to a small portion of the portfolio. While Knighthead expects most of the funds’ investments to be passive investments, the funds may participate actively in the reorganization process when Knighthead determines that this is desirable.Knighthead's funds may invest in high yield bank debt and bonds as a supplement to their focus on distressed securities. The funds seek to invest in the high yield market for both income and capital appreciation. In the case of bank loans, certain senior or secured bonds, or bonds that are expected to be refinanced within 3 years, the funds’ seeks to benefit from the income on the loans or bonds. In the case of longer term bonds, the funds seek to earn income and capital gains through a narrowing of the credit spreads due to an improvement in the credit quality of the company over time. The funds seek to short bonds with deteriorating credit fundamentals and enter into capital structure arbitrage trades where the funds will purchase bonds at one level of the capital structure while shorting other bonds at a different layer of the capital structure. The funds may use credit default swaps to effectuate short positions.^In addition, Knighthead may purchase equity and other securities that utilize complementary investment skills to their debt strategy. The firm also employs a value-oriented strategy that focuses on companies whose securities have declined substantially due to industry or company specific issues. Knighthead offers a strategy that focuses on investments in undervalued securities where a catalyst may bring about a revaluation of its securities. The types of catalysts include restructurings, reorganizations, spin-offs, management appointments, capital market transactions, lawsuits, regulatory decisions, industry consolidation and asset divestitures.