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Guest Background: Sreeni Prabhu is a co-founder, Co-CEO, Managing Partner and Group Chief Investment Officer at Atlanta, GA-based Angel Oak Capital and is responsible for the overall investment strategy of the firm. He is also the Chief Executive Officer and President at Angel Oak Mortgage REIT, Inc. (NYSE: AOMR).
Prior to Angel Oak, Sreeni was the Chief Investment Officer of the investment portfolio at Washington Mutual Bank in Seattle where he managed a $25 billion portfolio. He was also part of the macro asset strategy team at the bank. Sreeni previously worked for six years at SunTrust Bank in Atlanta, where he was responsible for investment strategies and served as Head Portfolio Manager for the $3 billion commercial mortgage-backed securities portfolio. He began his career at SunTrust in 1998 as a Bank Analyst focused on asset/liability management and liquidity strategies.
Sreeni holds a B.B.A. degree in Economics from Georgia College and State University and an M.B.A. in Finance from Georgia State University.
Episode Summary: Angel Oak has a unique vertically integrated business model consisting of its asset management and mortgage solutions businesses. The company both originates non-agency mortgages, but invests in them too. The company has a very successful ETF platform that focuses on securitized credit opportunities.
In the episode we discuss the broad Angel Oak story: how it came to be after the GFC and how it is investing today as it sees opportunities across the board in securitized credit (resi mortgages, CRE, private credit, HELOCs) and more.
Detailed Episode Show Notes: Unlocking financial value through alternative credit is a central theme in this conversation with Sreeni Prabh, co-founder, Co-CEO, Managing Partner, and Group Chief Investment Officer at Atlanta, GA-based Angel Oak Capital. With a keen focus on the structured credit space, Sreeni discusses how Angel Oak, one of the largest securitizers of non-qualified mortgages in the nation, skillfully navigates market dynamics to create strategic long-term value for investors. He highlights the current opportunity in mortgage-backed securities (MBS), as inflation stabilizes and interest rates are expected to decline, presenting a historic chance to enhance fixed-income allocations. Furthermore, Sreeni elaborates on the burgeoning second lien mortgage market, emphasizing the significant equity homeowners possess and the untapped potential for strategic financing solutions. Through this episode, listeners will gain insights into the evolving landscape of fixed income and the innovative approaches that Angel Oak employs to meet the needs of both institutional and individual investors.
Sreeni shares his insights on alternative credit and the unique opportunities within the non-qualified mortgage sector during our conversation. Beginning with his personal journey, Sreeni recounts his transition from a rising junior tennis player in India to a prominent figure in finance, highlighting the importance of networking, resilience, and a willingness to pursue an unconventional path. He emphasizes Angel Oak's strategic positioning as a leader in the mortgage-backed securities market, particularly in non-QM loans, and how the firm's comprehensive investment platform creates long-term value for its clients.
As the discussion progressed, Sreeni dove into the current economic landscape, noting the potential for fixed-income investments amid declining interest rates and controlled inflation. He points out that mortgage-backed securities are trading at historically attractive spreads, presenting a compelling case for investors. The conversation underscores the significance of education in the financial sector, with Sreeni advocating for transparency and trust-building between Angel Oak and its clients. This commitment to educating advisors and investors, as well as evolving the product and solution set, is a cornerstone of the firm's strategy and has led to significant growth in assets from the private wealth and other channels.
The episode also explores the emerging second lien mortgage market, where homeowners can leverage their home equity for various financial needs. Sreeni highlights the substantial addressable market, estimated at $1.6 trillion, and discusses how Angel Oak is prepared to meet this demand with innovative financial products. As the episode concludes, Sreeni shares his vision for the future of Angel Oak Capital, emphasizing the need for a patient, long-term approach to investing in the ever-evolving financial landscape.
Takeaways:
Sreeni Prabhu's journey from India to Milledgeville, GA to leading a $20 billion asset management firm is inspiring for anyone pursuing their professional and personal interests, regardless of industry or career.
Angel Oak's unique position in the mortgage-backed securities market offers compelling investment opportunities.
The firm emphasizes a long-term perspective, focusing on sustainable growth and risk management.
Understanding the second lien mortgage market can provide valuable insights for financial advisors.
Investing in non-qualified mortgages offers significant potential returns in the current economic climate.
Angel Oak's commitment to education and transparency enhances relationships with investors and advisors.
Links referenced in this episode:
Companies mentioned in this episode:
Angel Oak Capital
Angel Oak Mortgage REIT
SunTrust Bank
Washington Mutual
Fannie Mae
Freddie Mac
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