New York City-based Fundamental Advisors LP has recruited a former head of municipal trading at Goldman, Sachs & Co. to launch a new investment fund.
Hector Negroni has more than 20 years of municipal portfolio management experience. He worked at Goldman Sachs from 2005 until this spring, overseeing municipal capital commitments, flow and proprietary trading, money markets, collateralized lending and issuer derivatives.
Before working at Goldman Sachs, Negroni had positions at Société Générale, Lazard Freres and Citigroup.
Fundamental Advisors has recruited Negroni to co-lead Fundamental Credit Opportunities, which is also being launched this month. FCO is a partnership between Negroni and Fundamental Advisors.
FCO “will take a patient, opportunistic approach, married with a broad mandate,” Negroni said.
“I’ve never seen as big a disconnect between the diverse and fragmented issuer community and the homogeneous and concentrated investor community,” Negroni said. Most muni asset managers focus on passive investing with an emphasis on current tax-exempt yield, he said, adding, a large part of the muni market is not being focused on.
Many other investment funds focus on a narrow slice of munis, Negroni said. By contrast, FCO will invest in a wide variety of munis and muni products, including tax-tree, taxable, derivatives, hedges, high-grade and low-grade, on-the-run and off-the-run structured munis.
“FCO will combine experienced professionals, a tailored capital base and a proven investment approach to address dynamics in the municipal universe otherwise unattended to by market participants,” Negroni said.
Since the financial crisis, there are fewer active managers of munis, he said. FCO intends to occupy the sparsely occupied active managing niche.
FCO would seek sophisticated investors who understand that the bond market is not only a place to get safe, current yield, but also one to gain recurring total return opportunities, Negroni said.
“We are bringing a strategy found in the corporate and distressed investment worlds of being credit-opportunistic to the municipal marketplace,” he said.
FCO expects its investors to be pension and insurance companies, very high-net-worth individuals and large family offices that serve very wealthy families, Negroni said.
Fundamental Advisors chief executive officer Laurence Gottlieb said he has known Negroni for many years. Gottlieb has talked with Negroni about working with Fundamental Advisors for about six months. However, only in the last 30 to 60 days have these discussions become serious, he said.
Fundamental Advisors formed in 2007 to invest in unusual situations in the municipal revenue bond market. It has sought to “revitalize distressed assets in such sectors as senior care, affordable housing, student housing, infrastructure and hospitality,” according to the company.