Peter DeCaprio Downside first.
Peter DeCaprio invests where the arithmetic of a balance sheet matters more than the mood of a market. As a Member of Emerald Coast Holdings LLC in Fort Lauderdale, he underwrites lower middle market companies and the credit instruments built around them, from venture debt to distressed paper, and reads telecommunications and utilities through the same lens. The position comes after the work, never before it, and a price that already assumes the best case is a price he declines.
01Disciplines
Five ways to own a claim on cash flow.
Each is held to one standard: the downside is priced before the upside is discussed.
- Venture debt
- Loans to growing companies, sized against the cash already in the business and the time it buys.
- Distressed credit
- Obligations of companies in trouble, bought at prices that assume the trouble is permanent.
- High yield
- Bonds below investment grade, held only where the coupon is paid by cash flow rather than by the next refinancing.
- Private credit
- Directly negotiated loans to lower middle market companies, with terms written to protect the lender.
- Closed end funds
- Listed funds with a fixed share count, of interest when the market price drifts well below the value of what they hold.
02Sectors
Networks first, stocks second.
Telecommunications sits at the center of Peter DeCaprio's sector research, and utilities sit beside it as a second area of interest. The two have more in common than their tickers suggest. Both sell a service customers keep paying for through a recession, both own physical networks that cost a great deal to build and comparatively little to run once built, and both carry enough debt that the balance sheet deserves as much attention as the income statement. He treats them as infrastructure that happens to trade, and asks the same questions of each: what the assets earn, what must be spent to keep earning it, and how much of the difference reaches the capital that owns them.
03Perspective
In his own words.
The price he wants is one that already assumes the worst, because that is the only price with room in it for his own mistakes. Everything else about the approach follows from that.
An essay by Peter DeCaprio on what roughly three decades of investing taught him, why a private firm suits the work, and what contrarian positioning costs before it pays.
Read the perspective