Which of the large liquid distressed managers are still good seats?

Brigade - their HF seems to have actually decent performance but it's still shrunk quite a bit in last decade, has large CLO business (8-10B?) and long only "opportunistic credit" (assume this means just lower fee “anything in credit” strategy to replace their true HF money), people I’ve met here are generally pretty smart and seem happy with lifestyle / pay so not sure how to bridge that with HF decline, single research team across all products has its pluses and minuses (I’ve heard both sides of argument and can see where people wouldn’t like it vs. where people would), also would note they were supposed to be acquired by Lazard (maybe some conflict of interests around Brigade’s core distressed strategy vs. Lazard’s advisory work) but it’s something to keep in mind if joining if that sale does happen as also mentioned below with Oak Hill / Carval / Angelo etc.

Marathon - rough culture and pay significantly below market, all their HF strategies blew up (pretty consistent trend here...) so they shifted to private funds to invest in distressed like Monarch (2 year investment period / 3 year harvest, 8% hurdle to earn perf fees which can be a tough hurdle to beat absent real market dislocations like raising and deploying all at bottom of market ala March 2020), has significant CLO / long only capital similar to Brigade, modestly grown in last few years, founder seems a bit annoying appearing on Bloomberg TV every 2-4 weeks telling the world that defaults are coming (no shit sherlock, basically a B/C tier Howard Marks)

Davidson Kempner - solid multi strat fund with significant HF and private capital funds (longer investment period on private side and a more broadly deeper distressed investing experience vs. say a Marathon), consistent growth in assets without being diluted by CLO mix is best indicator of success, thoughtful investors and very, very commercially minded (I'd describe most people here besides maybe Lauren as pretty “even-keeled”), trying to deliver lower vol / HSD "uncorrelated" returns though historical returns looked poor to quite poor (2020-2022 might have changed on HF side but you can dig up DK 10-20 year returns pre-COVID on this forum, think private funds have generally done pretty well given longer investment period to invest when time is right vs. forced to put capital to work each day in a HF), poor string of years pre COVID hasn't seemed to stop them from significant firm growth, gone through 2-3 leadership changes without skipping a beat which is impressive (opposite of Canyon), Yoseloff recently went on Capital Allocators podcast that give you a sense of his personality / how he talks & thinks

Varde - not super familiar besides they seem to operate with mostly drawdown / private funds like a Carval, one of the winter warrior funds in Minnesota i.e. whitebox, carval, castlelake, wayzata (not sure if still around?) 

King Street - poor returns and some leadership turnover has driven the HF to shrink quite a bit (basically looks like Anchorage right before shutting down though Anchorage had some real idiosyncratic issues regarding single investments as outsized % of NAV and questionable founder dynamics), have tried to steer away from distressed in last 5’ish years which was their DNA historically (for good reason – because large liquid credit funds doing distressed hasn’t generated alpha!! Plus that strategy doesn’t match liquidity profile of HF products), started transition of moving into private drawdown funds (again with a hurdle which really hurts $$$ to pay people vs. the glory days of 20% no hurdle on a 10-20B HF) to replace HF redemptions, AUM has basically fully stagnated at ~20-22B total with underlying mix shifts away from the HF (think HF is something like 5-10B now? CLO AUM is 9B of the 22B but under a separate team so similar AUM mix dynamics to a place like Brigade). Weird timing with the Yoseloff interview but Goldschmid also happen to have an interview with Bloomberg this week (search “MEDI LIVE 398095986” on a BBG terminal)

CarVal - sold for $750m to Alliance Bernstein, run into them every now and then in AHGs, honestly don’t have much to add here but I feel the trade of joining a firm that got acquired by a big asset manager is not really a good one for someone in their 20’s looking to make long-term career at that place (mostly because things turn super hierarchal, loses “feel” of actually being at a nimble HF, way less money to go around now that you are beholden to public shareholders) 

Oak Hill Advisors - solid credit fund that does a bit of everything and does it well enough (evidenced by transacting at an eye-watering $4B to T Rowe!), read Carval note above – same applies, very much not a HF in terms of culture (formal / process oriented / hierarchal work culture) or environment, separate distressed group from industry teams seems a bit dumb / bad from an experience standpoint (distressed egos take over picking though scraps of shitcos leaving industry team by wayside, and similarly industry guys don’t get proper workout experience when distressed team is doing all the heavy lifting / leaving you off calls & emails), think it’s a one of the more solid first jobs to get in credit to use as a jumping board to another fund down the line because you gain exposure to all areas of credit to figure out how to actually make money in the asset class (know a guy who did such a move before moving to an Elliott / Redwood / Silver Point type place)

Beachpoint – i generally like these guys, they are more focused on more stressed/liquid credit (less distressed except for random one-off situations, but remember making 20-30% total return opportunity in HY bonds over 24 months is just as good as investing in distressed shitcos), what I like about platform is there’s likely still quite a bit of room to grow given the asset base isn’t gigantic yet (think they are ~15B today, were maybe ~10 pre-COVID?), being based in Santa Monica is unique selling point (they also have NY office), they have some unique strategies other multi-strat credit funds don’t have like a dedicated PE / real estate fund

SVP - approaching 20b+ AUM and been very successful generating ~2x MOICs for their investors (which would be top decile for any credit strategy over 7-10 yrs), have a distinct advantage over most other credit funds because they have longer locks on their capital (i.e. a true private equity fund pursuing private equity strategies through debt/event), I find their ability to navigate traditional publicly traded credit opportunities quite slow / not nimble enough so you have to realize that going in (i.e. yes you can own the entire WPG complex as 100% owner but you might spent your entire 2020 dislocation period working on 2-3 ideas vs. many names above a single person on investment team might go through a 10-20 deployable ideas in same period), very deep underwrite process naturally given the PE nature of biz 

Sculptor – pull up the stock chart of SCU and hit max (-97% drawdown), there’s a reason when you personally analyze public companies one of the first things you’ll do is take a look at how stock has done over 1-3-5 years…no reason you shouldn’t do same with firm you spend 10-12 hours a day working at, one their more involved distressed PMs left for Goldentree recently,  the credit arm has honestly had decent performance but hard to separate how economics flow to team members there vs. being a troubled publicly traded stock which gives me pause, smart team otherwise

Monarch – firm stagnated / HF shrank massively pre-COVID then saw a bit of a renaissance being super aggressive investing in 2020, rapidly raised capital thereafter but had chicken-egg issue (raised a $4B fund in late 2020 then you are forced to invest that money in tightest credit environment that proceeded) leaving them with some bad deals to workout now / hard to hit their 8% hurdle, have heard pay is notoriously low on cash side which for that reason alone I would avoid (they’re otherwise generally good at least “driving a process” though I’m not sure cumulatively which of the distressed bets have been the biggest $ generators even though they do it a lot) 

Others not mentioned:

• Canyon - terrible work environment / worst returns of peers / most good people at firm have left
• Angelo Gordon - very solid with very thoughtful investment team, they've strategically grown to be true multi-strat credit but don't think they do as much in true equities, purposeful growth in RE like Canyon, I find their whole uptier nonsense they brought over from BX repetitive / stupid / tiring and most importantly non-alpha generating, will be interesting how firm changes if TPG acquires them
• Sound Point - mostly a CLO shop but have a few opportunistic credit vehicles)
• Public Arms within the Growing Private Credit Funds (Sixth Street, HPS, Owl Rock, Golub etc.) - Sixth Street is a notch above a lot of other firms on this list in both public and private investing
• PIMCO - behemoth but mostly does privately originated credit vs. public credit, any name they are huge 2019 listed holders in usually is because they originated the deal from other performing pockets near par)
• MidOcean - CLO-heavy but growing opportunistic credit funds
• Symphony - owned by TIAA and mostly manage daily liquidity mutual funds / long-only HY & loans, not sure if they have any real HF products today)
• Benefit Street - acquired by Franklin, used to have a sizeable HF product that shrunk / disappeared after a few terrible distressed investments

I'm probably missing a few other $10B+ alternative credit managers but these were the ones that came to mind.