Understanding IP Roles at Credit Funds - CLOs vs Opportunities
Alright - I am a liquid credit associate at a MF. I've been here for two years. I've learned a ton and really like the job. BUT I do most all performing credit and am most interested in credit opportunities. I am ideally looking for a credit HF seat (public or private, but if public) where they really ONLY take concentrated positions in stuff trading in 60s-80s. I love public markets, love the buy side, enjoy credit, but the par new issue lending and tracking is mind numbingly boring to me. That said, I want to be realistic about my opportunity set. Can I move straight to credit opps / special sits HF? IF NOT, what places hire analysts to work across BOTH CLOs and opportunistic credit funds? For example, I have heard that Apollo sort of does. Some funds that come to mind that may could be HPS, maybe Silver Point, maybe Millenium (ik they are ramping up credit strategies)... Please help me out here especially if you have anecdotal information. Really appreciate it. Love the job but just want to focus on less names but go deeper and build real conviction and maybe look further down in cap stack. A lot of these HHs don't actually know if it's just CLOs or everything. Thank you!
"ONLY take concentrated positions in stuff trading in 60s-80s"
Do you hate yourself?
You are thinking of the wrong set of asset managers. HPS has a separate distressed team that now includes Blackrock's guys, as does Apollo.
Would start with former HFs turned CLO shops like Goldentree, Brigade, or Anchorage.
This is precisely why I’m asking. So my opportunity set for opportunistic credit is pretty limited then? It’s like diameter arini goldentree redwood monarch knighthead king street etc or go to Apollo or HPS etc and be in opportunistic credit group? What about MMs like Millenium or DE Shaw?
I was just trying to answer your question on where you could cover a sector across CLOs and opportunistic.
Not a question for WSO, but a question for your HH. I wouldn't sell yourself short; some of the funds you listed would hire the janitor from Apollo if they could. I assume by liquid credit at MF you mean a PE MF. Those brands carry a lot of weight even if you're not on the PE team.
HPS has a distressed team and a public team. Distressed team is mostly special situations private credit with some traditional distressed, not sure what is going on regarding BlackRock and those teams. Less familiar with their public team but I believe they were traditionally more a multistrat akin to an Anchorage rather than a large CLO platform like the other MFs.
The public credit market is consolidating towards scaled platforms that have varying degrees of performing/opportunistic money that will dictate their investment processes and structures. There are simply less opportunistic credit SMs given fee compression and lackluster returns. We will likely need another distressed cycle for some more capital to shift back to these strategies and for more funds to open up. In the meantime I would see if you can shift into a platform that has some more opportunistic/non-CLO money where the process is more robust than your current seat. I don’t think that would be that difficult, it’s just about finding the right seat.
I appreciate the helpful response. I agree it shouldn’t be too difficult, just about finding the right place. I just can’t tell based on your response (and maybe you’re not sure) if HPS would be that place.
Sounds like this move could make a lot of sense from my current seat as I may not only invest across CLOs but also total return across opportunistic and distressed? Like I assume the liquid team does secondary opportunistic for their non-CLO funds but also can’t tell if they just do CLOs and the distressed team handles secondary public… i guess I just need clarity in the interview is all (HH doesn’t know)
There’s less overlap than you think between the two strategies. In CLO you are doing less homework on each name and only evaluating BSL issuances + monitoring the portfolio and adjusting the book from time to time
In credit opps it’s increasingly private market focussed, with selected plays in the secondary market. A lot more focus on credit selection and sourcing is also very important. Once you enter a big competitive credit pricing process, you’ll likely get priced out unfortunately. Books are a lot more concentrated than CLO
so that’s why every asset manager has them separate. At some point you have to choose one or the other, but if you walk into an interview right now saying you want to do both, you won’t get the traction you want
Understood - so HPS type place referenced above is more likely just CLOs on liquid side …
Presumably they have both strategies and two different teams
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