Waterfall Asset Management

Tom Capasse and Jack Ross, the co-founders, lead investment decisions as Managing Partner/CIO and Managing Partner/President, respectively. Both came from Merrill Lynch's structured-credit desk, where they traded ABS and mortgage credit before launching Waterfall in 2005. The partnership has maintained a flat, senior-heavy structure that concentrates decision-making among experienced credit traders rather than distributing authority across a large analyst class.

Sourcing relies on loan-level underwriting infrastructure and operating-platform relationships rather than competitive auctions. Waterfall owns or controls origination platforms — including the publicly traded Ready Capital REIT — that generate direct lending opportunities in small-balance commercial real estate and specialty finance. For ABS and structured products, the firm's ability to underwrite esoteric collateral at scale attracts deal flow from issuers and banks that need certainty of execution on complex securitizations.

Ready Capital is a publicly traded mortgage REIT that Waterfall created and externally manages. The vehicle originates and acquires small-balance commercial real estate loans, providing Waterfall with permanent balance-sheet capital and a fee stream separate from its commingled funds. This structure means Waterfall functions as both a credit manager and an operating-company sponsor, a dual role that is unusual among peer credit firms.

Waterfall structures its investments through commingled funds, separately managed accounts, and direct operating-platform investments. The firm does not function as a fund-of-funds. Capital deployment is primarily direct: purchasing loan pools, underwriting whole loans, or building origination platforms. The SMAs are customized for large institutional LPs — typically insurers and pensions — that want dedicated exposure to specific credit verticals within Waterfall's underwriting capability.

Waterfall focuses on structured credit, asset-backed securities, whole loans, specialty finance, and real estate credit. The firm operates across the liquidity spectrum — from liquid ABS trading in public markets to private whole-loan portfolios and operating platforms. There is no venture or equity growth-stage activity; the firm's entire mandate sits inside credit and credit-adjacent assets where contractual cash flows and collateral security define the return profile.

Waterfall does not invest in corporate credit broadly, unsecured consumer lending, or traditional equity. The firm's expertise is in asset-level underwriting — mortgage loans, consumer installment receivables, esoteric ABS — rather than balance-sheet analysis of operating companies. Corporate direct lending, broadly syndicated loans, and high-yield bonds fall outside the mandate, as do venture capital and growth equity.

Waterfall typically acts as the lead or sole capital provider in its structured-credit and specialty-finance transactions, though the firm has partnered on large-scale NPL portfolios — most notably co-investing with Elliott Management in the $1.3 billion Waterfall Victoria Eredita vehicle targeting Italian non-performing loans in 2019. When the firm does co-invest, it does so alongside managers with complementary operational capabilities rather than passive LP-style participation.