Fixed Income Shop Pops Up

Terry Flanagan

Traditional buy-side and hedge fund veteran launches fixed income firm.

In February 2008 before the onset of the financial crisis, Sal Naro, with his partner Mark Fishman, said good-bye to their $2 billion dollar hedge fund, Sailfish Capital. Bets gone wrong in the credit and mortgages markets led to the firm’s downfall, but so was the case for many more firms.

Since Sailfish’s demise, Naro has held the post of vice chairman of Kentucky-based Jefferson National Financial, and chief executive the firm’s asset management division and is once again launching his own firm—Coherence Capital Partners, a fixed income-oriented shop borne out of a management buyout of Jefferson National’s core insurance group. Naro will serve as chief executive and will spearhead Coherence from New York.

“Coherence will look to capitalize on inefficiencies and thematic trends in the capital markets,” Naro said. “Our primary thesis is to invest in companies that show strong performance in their balance sheets with earnings that meet and beat expectations while taking short positions in credits that miss earnings expectations and suffer from continued weakness in their primary business metrics.”

As legacy would have it, investing and trading credit instruments will be central to Coherence’s mandate. The firm, which is managing a $100 million Jefferson Financial general account portfolio, will holistically look at all fixed income instruments– traditional and non-traditional fixed income assets for a broad pool of institutional (family offices, foundations) and retail investors.

“We feel this is a unique time to launch our firm given our belief that global geopolitical uncertainty and over leveraged economies creates fertile investment opportunities on both the long side and the short side of the portfolio,” Naro told Markets Media.

The firm is aiming to invest in bonds, loans, credit default swaps, as well as index and structured products. In typical hedge fund fashion, Coherence’s primary alternative strategies will be focused on structure arbitrage, event driven and relative value, executed through momentum trading.

Perhaps Coherence’s primary asset will be his wealth of experience, and connections to other industry talents. He will be bringing on fellow team members from his past ventures to join Coherence. From Jefferson National Asset Management, Head Portfolio Manager Vincent Mistretta, Greg MacKay, the firm’s former chief operating officer, and Robert Del Grande, its former chief financial officer. Lastly, David McClean will join the Coherence team to liaise with regulators, formerly chief compliance officer of Sailfish Capital.

Also, as a third party registered investment advisor to Jefferson Financial, Coherence will provide risk monitoring and advisory services for a $200 million portion of the firm’s reinsurance contracts.

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