Equity holders in a fund often seek out replacement managers for ailing collateralized debt obligations (CDOs) based on the strength of the replacement portfolio manager's track record. But rarely, if ever, has a firm established a distinct replacement manager business whereby the firm proactively targets poorly performing CDOs that need replacement managers. That's exactly what Prudential Investment Management (PIM) is doing.

With at least eight deals under its belt so far, the firm, which is a division of The Prudential Insurance Company of America with $310 billion in assets, appears to be carving a new market niche by marketing itself specifically as a replacement manager, in addition to being a traditional CDO manager.

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