Opportunistic / Distressed Credit Recruiting Woes
I have gone through processes with four major funds in this space and have struck out every time. I am an AN1 at a top RX group (although not PJT / EVR / HL), and find myself struggling with recruiting. In each of the four processes I have gone through, I have made it to the final or near final rounds. Now that it is May, I am getting antsy about how many more opportunities may come to the market, and wonder if I should start branching out to more traditional PE or private credit roles.
As you all know, these processes are incredibly difficult. We are talking about going through 10 rounds of interviews and at the end competing against a handful of equally qualified candidates. Distressed credit is, without a doubt, what I want to do in my professional career (at least in the short to medium term).
Coupling these recruiting woes with the stress of the job and the fact that my interview pipeline has basically dried out as of a couple weeks ago, I find myself in a pretty bad spot. I am not spiraling yet, but I am undoubtedly stressed out 100% of the time.
Does anyone have any advice on what next steps to take? I speak to headhunters on a weekly basis at this point, I have received feedback for what dinged me in the processes I have gone through, I have continually improved my own skills as an analyst (which I know will only benefit me for the next process I go through), yet I feel stuck.
Is it just the market? I wonder if Ken Griffin's recent disheartening realization on the power of AI is already affecting class sizes or perceived hiring needs. I wonder if the market will pickup in the coming weeks given that we are now in the Summer.
I really don't know what to think. I feel as though I am between a rock and a hard place, in a job that I hate going to, and there is nothing I can be doing more of. Apologies for the stream of consciousness.
If I can be blunt. Why do you want to work in Distressed credit, this could be a blessing in disguise man.
Why would you recommend someone not pursue it?
There has been a large uptick in interest for this space especially amongst the junior level. I always caution people away from it for a few primary reasons...
This is not a glamorous biz. You are often in knife fights over pennies, people romanticize the "intellectual pursuit" of distressed investing but to be candid the sharpest tools in this shed are lawyers who can charge out the ass for a business that is terminal. Look at outcomes from any recent distressed situation, ironically the best performance has been Re-Org equity plays in which it makes more sense to just have a large mandate to cover a name like Talen, Echostar etc.
Its also plain mean, everyone in this biz is out for each others neck. No one is collaborative and everything is a club deal (Its a very tiny club and you aint in it!)
Good luck, but just want to say that if you don’t work at a fund that has enough scale/resources to get big in a name, you’re screwed. Another shortfall to consider is that the number of names you can actually look at in distressed has fallen off a cliff in the last 10 years.
Bump - hitting the desk soon at one of these places and would be curious to know
Agreed on distress is a tool not a strategy. Fundraising generally horrible among distressed funds - DK, Marathon, King Street, to name a few. Diameter is explicit about it being not a distressed fund but focused on industry knowledge. Asset class Aum and net irr performance both pretty bad. Also no one wants to work with you if you do it for long enough in certain places (iykyk) causing issues to source non distressed deals. Eventually game of IQ but everyone can’t all be the smartest, so not really a career “path” so to speak
Any bright spot firms you would flag?
Actually I think silver point and goldentree returns are still good but that’s 1-2 years dated. Can ask headhunters though
If you just want to learn, any fund with good realized performance on the public side is good place to start. Most of them participate in some form of rx - Apollo, diameter, distressed desks etc
The real MVPs here is the DPG at DB. Agreed distressed is not a great long term career. Most of the value creation from where the pie is sliced is on the legal side. Look at the trajectory of lawyer pay.
They also have big losses and sometimes like to peddle loans they are stuck with. Tread cautiously there
Part of this must be your feedback? Is it mostly about investment intuition or are headhunters being general?
Fund A no feedback, Fund B feedback was provided and was intuition based on a specific concept which I have studied up on since then, Fund C ghosted, Fund D no feedback.
Of the feedback I have received from peers as well when I explain in detail what happened in these rounds, which I won't do here for anon reasons, it seems to mostly just be crapshoot of a process. I have not come out of a process thinking I could have done better given the contraints. There were things I could have done differently if I had known certain things going in, but without getting into detail each process has felt like a very solid attempt. I think the answer is to just keep taking shots until one converts...
In a similar position in several ways: interest in opportunistic credit is very similar to OP for those same reasons (uninterested in PE/DL) but keeps coming into question for a few reasons. A bit surprised people keep shitting on these HFs … my question is to those people, what do you recommend me and OP pursue as a long term career or mid level job to position ourselves for long term success? Just feeling a bit lost, seeking guidance. Everyone has something negative to say about every seat and every firm. Like what WOULD be a great seat
OP here - thanks for this comments. Agreed. I know everyone is going to hate to some degree but am just looking for guidance on how to think about next step given the reality of constraints any my own interests
maybe law school?
Feel like the comments here and on this forum in general around opportunistic/distressed credit shops are relatively uninformed — there is a big difference between being at an opportunistic credit hedge fund that plays in the distressed space when it makes sense and a distressed-only fund that labels itself as such… several funds in the first category that have done quite well and would be amazing long term seats, whereas for the second category I agree that you should be cautious about jumping headfirst into a shop like that.
OP here - agreed and definitely looking for something more akin to the first strategy. Wouldn't be opposed to the second but I think opportunities in distress come and go.
Experiencing the same issues here. Broadly targeting opportunistic credit and special situations investing. Feedback I have gotten has mainly been that they aren’t hiring or funds want prior buyside experience. At this point, just a numbers game to see which fund will give an offer.
Especially frustrating when these funds make you do multiple rounds of interviews and case studies only to just give any offers…
Some L/S credit HFs have done pretty well over the past years with relative value trading and levered CLO on the back of rate cuts, but pure distress/ SS playbook is certainly challenged from normalized returns perspective
Has anyone else in your group signed at these places? Maybe during OC? Have heard that some at PJT/EVR/HL are going to PE so I feel like most of these seats have yet to go around
No, but I know two of the funds I have interviewed with have hired associates. One I know filled their class, the other I think may come back to the market. Fund 3 I think may run another process next year but TBD, fund 4 I have no idea. Agreed that there are still seats out there - I may be unreasonably stressing about this, but I just feel stuck. Back against the wall
By definition good seats are rare, and I feel like people have given you the answers- diameter, Apollo , silver point. It doesn’t mean anyone can get one within each given year
Incoming ft looking to pursue something similar. Apollo has been mentioned a few times here - guessing its re hybrid but ik there’s also an opportunistic segment within the broader credit business. Curious where exactly the line is drawn between hybrid and opportunistic.
E.g.,- Is opportunistic more primary issue while hybrid trades in secondary mkt? - Is hybrid mostly structured equity nowadays?
They are interchangeable terms atp. Apollo had a hybrid value group. This has been split into hybrid credit (or opportunistic credit) and hybrid equity. They invest in the full spectrum
Bump. Similar situation here, OP. Would be happy to discuss further.
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