Mary Bates

Over the course of her career, Mary Bates spent time working in differing parts of the investment industry before she joined Meketa as a private markets consultant last year through its merger with Pension Consulting Alliance. Previously, she also worked as a director at Silver Creek Capital Management, senior research consultant at Hewitt EnnisKnupp, and analyst at Lehman Brothers, where she started her career with fixed income on the trading floor training ground. 

Her experience helped her shape her investment philosophy protecting clients’ downside, which helped last year when her team was scanning for possible market dislocations late in the credit cycle for clients.

While she was not sure where the dislocation could come from, she helped her clients build contingent funds, as well as fund of fund-type portfolios of managers who could rapidly deploy capital.

CIO: What (actionable thing) have you learned over the course of your career that has proven itself this year?

Bates: The ability to pivot and the need to remain flexible was a lesson I learned early in my career, and it has proven to be incredibly helpful this year. 

Right out of college, I was hired into the Sales, Trading and Research analyst program at Lehman Brothers. Like most sell-side analyst programs, I was hired into a class and went through a multi-week training program before being assigned a desk. As part of the job assignment process, you ranked your top choices for a permanent seat, and I ranked 1) equity; 2) off-the-trading floor; 3) sales. I went zero for three, or so I thought, being assigned a seat in fixed income, on the trading floor, supporting the emerging market debt currency strategist. While I did not get any of my preferences and probably would have enjoyed being a sell-side equity research analyst, I came to love the energy of the trading floor and the complexity of fixed income. I am grateful for that crash course in flexibility as well as the opportunity to learn bond math.

CIO: What investments (specific securities or sectors) look good to you now? And why?

Bates: Prior to the pandemic, when lending standards were declining and asset prices were near historic highs, we worked with clients to design market dislocation programs, anchoring the allocations around “contingent” or “trigger” funds. The vehicles were structured as “de facto” call options on a market dislocation as investors had made commitments, but the funds were not activated except in the event of a dislocation. These programs consisted of multiple managers who were highly complementary across strategy, size, and capital deployment so as to capitalize on opportunities in both the public and private credit markets. The managers capitalized on the tumult in the public corporate credit markets in March and April and have nimbly transitioned to the private market, where they are currently active in rescue financing, special situations, and capital solutions, and expect to deploy into distressed later in the cycle. We continue to find compelling opportunities in transitional capital.

CIO: What ones don’t? And why?

Bates: We are spending less time on the “mega” corporate distressed funds. Given the amount of capital being raised and the magnitude of the government intervention, we are concerned that it may be difficult for single strategy distressed funds to deploy significant amounts of capital into the market. In general, we are exceedingly cautious and being highly selective in allocating capital.