[REPLAY] Jonathan Lewinsohn – Diameter Capital Partners (Manager Meetings, EP.05) - Capital Allocators Recap

Podcast: Capital Allocators

Published: 2026-02-02

Duration: 59 minutes

Guests: Kristen Van Gelder, Jonathan Lewinsohn

Summary

Jonathan Lewinsohn, co-founder of Diameter Capital Partners, discusses the firm's credit-focused strategy and its role as an all-weather credit hedge fund. The conversation covers Diameter's nimble investment approach and how macroeconomic changes influence their portfolio decisions.

What Happened

Diameter Capital Partners, co-founded by Jonathan Lewinsohn and Scott Goodwin, manages a $6 billion credit-focused hedge fund, alongside $1 billion in CDOs and a $1 billion drawdown fund. The firm was initially backed by Evanston Capital, which saw potential in their early-stage investment strategy and prior relationships. Diameter's investment strategy is centered around flexibility, allowing them to adapt to changing market environments. They focus on the full credit spectrum, including investment grade, high yield, stressed, and distressed credit, while avoiding control over companies like private equity firms.

During the COVID-19 crisis, Diameter demonstrated its nimble approach by quickly shifting from long positions to shorting travel-related businesses and later buying high-quality investment-grade bonds. This ability to pivot underscores their strategy of maintaining a liquid portfolio to rapidly respond to market changes. Jonathan Lewinsohn emphasizes the importance of understanding macroeconomic cycles and the narratives that drive investment decisions.

Diameter Capital values thorough research and documentation, ensuring clarity in their investment process. The firm employs a process-heavy approach and operates with a flat organizational structure, fostering direct collaboration between portfolio managers and analysts. This structure has helped them grow significantly, closing their main fund to new investors to maintain performance.

The distressed debt market has evolved, necessitating a focus on both assets and liabilities to generate returns. Diameter Capital prefers to be influential in bankruptcies without controlling them, allowing for an exit post-bankruptcy. They are selective in distressed situations, focusing on cyclical issues rather than secular declines.

Jonathan Lewinsohn's background in credit markets, including his experience at Anchorage Capital and Centerbridge Capital, has shaped his investment philosophy. His approach is influenced by his father, an equity research analyst, and his early interest in business, which has led him to prioritize downside protection and macroeconomic understanding.

Books like 'Everybody Lies' by Seth Stephens-Davidowitz have influenced Jonathan's skepticism towards polls, especially during the COVID-19 pandemic. He disregards poll predictions about people's behavior, focusing instead on data-driven insights. His fascination with narratives extends to how companies operate within the macroeconomic environment, shaping his investment decisions.

Key Insights