Bruder Capital

Analytics Applied to a World of Risks

About Bruder Capital

Approach.

We like to "get paid along the way" through either dividends or some other form of regular payment - fixed coupons, variable but regularly timed interest payments, production payments on limited partnership interests, declared share repurchases. There is a great deal of historical evidence to support our preference for regular payments. For example, stock dividends accounted for 52% of the total return on S&P 500 stocks between 1988 and 2009. It's the other 48% component of that return which often proves problematic, namely, price appreciation. Our objective is to garner as much of the first component while removing exposure to the second. We use a primarily quantitative approach to find these situations, fundamental analysis to analyze them and hedges to reduce their risk. Under certain circumstances - and they have to be pretty compelling - we will place a directional bet using fundamental analysis as our primary tool. But those directional bets are typically associated with a predictable event: a takeout, spinoff, resumption or cancellation of dividend payments, reorganization, recapitalization, bankruptcy.



Tactics. 

​Bruder’s combination of fundamental analysis and statistically-based hedges is designed to extract the main component of return while limiting exogenous threats to company valuations:

Emphasize Cash Payments – we seek out securities with timed and growing payments: dividends, production payments, interest on underlying loans and bonds. These are main contributors to investment returns over the long term.

Seek Events  – we search for securities whose value is misunderstood in the market and can be expected to re-price during a specific time frame due to: accounting mishaps, delayed financial statement filings, asset dispositions or acquisitions, spinoffs, reorganizations, bankruptcies, and other corporate events.

Protect Capital - we create our portfolio with the intention of limiting the underlying risk to either the timely cash payments we receive or the value we expect to realize from an event. This sometimes requires the use of commodity, index, and sector hedges.​



Funding. 

Bruder Capital was established as a limited liability corporation in March 2009. Funding commenced in Q2 '09 with partners investing $780,000 for 156 Class A Common Share Units at a price of $5,000.00 per share. A second round of financing was completed in Q1 '10 totaling $125,000 when Bruder issued 15.6 Class A Common Share Units at a price of $8,229.04 per share. Bruder completed a third round of financing in Q1'11 totaling $400,000 when it issued an additional 44.26 Class A Common Share Units at $9,038.41 per share. In January 2015, Bruder completed a fourth round of financing totaling a net $728,399 by issuing 66.27 net Class A Common Share Units at $10,990.79 per share. Funding to date totals $2,033,399. There are presently 281.59 Class A Common Share Units outstanding.