Lines between hedge funds and private equity funds becoming blurrier?
(King Kong, 1,845
Points)
on 8/14/11 at 9:06pm
I've been reading various articles online that have said this and I think the same thing may have been said somewhere in these forums a couple of times.
It seems like it means more that hedge funds are getting involved in pe stuff rather than the other way around. What do you think?
side question (that's been answered on these boards before but w/ varying responses)... how hard is it really to break into pe after working in a hf? are any of the skills transferable?
I can see this being true
I can see this being true (though I haven't really been around long enough to comment on the distant past).
Lots of hedge funds are growing so large that they consider themselves 'alternative asset management firms'. The point is, they are such gorillas that they allocate funds to PE-like investment strategies (mezzanine debt, senior debt, leveraged loans, VC, etc. I think this is probably the result of a few things, one being so large they move the price of equities they trade.
it is harder generally for
it is harder generally for junior hf guys to go into PE associate/senior associate roles because HF associates/analysts don't deal with due diligence (accounting, legal, finance). Also, the skills are almost non-transferable if you work in a macro fund (more relevant if in the fundamental value investing fund).
That being said, why would you want to go into PE if you get a HF job out of banking? I always see PE people wanting to move into HF or just stay at PE, not the other way around.
RonBurgandy wrote: I can see
I can see this being true (though I haven't really been around long enough to comment on the distant past).
Lots of hedge funds are growing so large that they consider themselves 'alternative asset management firms'. The point is, they are such gorillas that they allocate funds to PE-like investment strategies (mezzanine debt, senior debt, leveraged loans, VC, etc. I think this is probably the result of a few things, one being so large they move the price of equities they trade.
I see the push coming from the other direction, actually. While some hedge funds end up in something of a private-equity role due to distressed debt or loan-to-own transactions, and a few have raised PE funds at one point or another (Greenlight and SAC come to mind), almost every significant PE sponsor has some form of debt capacity (mezz, CLO, distressed/opportunities, etc) and these operations start to drift into hedge fund strategies or become liquid credit funds in their own right (GSO at BX for example runs basically every type of debt fund under the sun). Lately there's been a push towards equity and macro management as well, such as KKR hiring the GS prop team.
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
I guess that's true, as well.
I guess that's true, as well. I just see the movement with the larger hedge funds that are looking to really diversify their reach and strategy base. Also a bit skewed since the firm I work for has made this move into the PE/loan space, and has also reached into VC a bit, yet it made its namesake as a converts desk.
I see the push coming from
I see the push coming from both directions. I work for a macro fund that most would be surprised does some stuff that I would call private equity, and likewise I have seen alot more private equity firms either hiring teams of liquid products traders or attempting to seed new hedge funds.
Yeah, seen this on both
Yeah, seen this on both directions as well particularly in the larger funds. I think Tudor even has a VC fund if I'm not mistaken. Posting solid returns is getting harder and harder nowadays even for the top shops so they're looking for other areas to exploit.
People like Coldplay and voted for the Nazis, you can't trust people Jeremy
Interesting. Being in the
Interesting. Being in the more illiquid end of the debt spectrum I guess we see the sponsors more (constantly buying up CLO capacity, etc). Bondarb does your fund do any control PE, vs. growth equity/VC or PIPE situation with public companies?
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
Kenny_Powers_CFA
Interesting. Being in the more illiquid end of the debt spectrum I guess we see the sponsors more (constantly buying up CLO capacity, etc). Bondarb does your fund do any control PE, vs. growth equity/VC or PIPE situation with public companies?
I am not sure the full scope of what the PE guys do because they represent a really small part of the firm, sit on a different floor, and I have never met any of them...I know they do some venture capital but thats it. It's literally like 3 employees. They also "trade" (or whatever its called in venture capital) out of a different entity so i dont really care about how well they do.
Jorgé wrote: Yeah, seen this
Yeah, seen this on both directions as well particularly in the larger funds. I think Tudor even has a VC fund if I'm not mistaken. Posting solid returns is getting harder and harder nowadays even for the top shops so they're looking for other areas to exploit.
Yes; Tudor has a VC fund based in Boston. They also gave money to Headlands Technologies, a Chicago based high-frequency trading firm founded by ex-citadel partners.
Aside from KKR, what other
Aside from KKR, what other big PE firms have hired liquid products traders and macro teams?
Excluding the less
Excluding the less liquid/illiquid debt strategies that most major funds have (CLOs, mezz, distressed, mid-market lending) but including liquid credit strategies (relative value, synthetics, etc):
BX is big into seeding new equity and macro managers though I'm not familiar with them having any liquid products internally except to the extent that GSO has liquid credit desks.
Carlyle has an emerging markets-focused credit and macro fund.
Bain: Sankaty has some liquid HY and structured credit/synthetics, plus Brookside which is a public equity fund and the originally named Absolute Return Capital, which is macro.
Apollo has a value fund and an Asian multi-strategy fund
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
Kenny_Powers_CFA
Excluding the less liquid/illiquid debt strategies that most major funds have (CLOs, mezz, distressed, mid-market lending) but including liquid credit strategies (relative value, synthetics, etc):
BX is big into seeding new equity and macro managers though I'm not familiar with them having any liquid products internally except to the extent that GSO has liquid credit desks.
Carlyle has an emerging markets-focused credit and macro fund.
Bain: Sankaty has some liquid HY and structured credit/synthetics, plus Brookside which is a public equity fund and the originally named Absolute Return Capital, which is macro.
Apollo has a value fund and an Asian multi-strategy fund
Thanks for that. Yeah, I totally forgot about Bain. Working at brookside or absolute return is pretty close to my dream job. I know one guy at brookside now: ivy pedigree, bulge bracket banking, top hedge fund, stanford business.
In addition to the above,
In addition to the above, Carlyle also owns a controlling stake in Claren Road, a $5B liquid credit hedge fund.
I stumbled on this thread
I stumbled on this thread while searching for real estate related hedge funds.
In terms of REPE both hedge funds and private equity firms seem to be moving closer to one another at the top end of the spectrum. Larger Hedge Fund managers like Fortress, Oaktree, etc... have become involved in REPE (mostly special situations & distressed) through dedicated funds or their distressed debt funds. At the same time, Private Equity firms like Blackstone have set up special situations funds to compliment their opportunity funds (i.e. REPE) to allow them to invest in distressed RE debt, special situations and other non-controlling positions.
It makes sense for the larger alternative investment managers (whether they started as PE or HF) to expand their offerings. They already have the distribution to market these new funds, the infrastructure/team to support/train/attract talent and the brand to allow extension into new markets.
Also, the bulge bracket banks are retrenching from these areas due to new regulation and structural change. So there are lots of areas where alternative managers are not competing with Citigroup's cheap shareholder/depositor money, etc...
I wonder how this would change the required skill-set in the future. More people who invest in both debt and equity? Better understanding of finance among sales/relationship/capital raising guys?
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
Ricqles: it is harder
it is harder generally for junior hf guys to go into PE associate/senior associate roles because HF associates/analysts don't deal with due diligence (accounting, legal, finance). Also, the skills are almost non-transferable if you work in a macro fund (more relevant if in the fundamental value investing fund).
That being said, why would you want to go into PE if you get a HF job out of banking? I always see PE people wanting to move into HF or just stay at PE, not the other way around.
with regard to the last point -- which I understand simplistically as HF > PE -- I am curious is the fact that few people move from HF into PE because they don't want, or they can't? Provided that the skill set at HF is hardly transferable, I always can't help to second guess that the answer is the latter. Pls correct me if i'm wrong. thx.
most people who go to hfs are
navy000: Ricqles: it is