Breaking down distressed funds by strategy
Finishing updating this leaving as the three buckets below.
Setting up a topic to talk about distressed / capital solutions / special situations. I’d love to bucket names on core types as it can be a bit murky at times and could help with recruiting in the future as a lot of funds do varying things. Ultimately this isn’t supposed to say this fund only does X, but moreso engage discussion as people make choices for recruiting.
I’m not 100p clear on some of this as well so feel free to correct me or suggest additions or subtractions. I’m going off primary focus (for example most of the private distressed lending buckets have secondary allocations).
Primarily private distressed lending / minority equity
- Ares Special Ops
- Atlantic Park
- HPS
- MGG
- Blue Torch
- Apollo Hybrid Value
- Owl Rock Opportunistic
- Carlyle Opportunistic
- Brookfield special investments (equity lean)
- Sixth Street Strategic Capital (equity lean)
- Clearlake Opportunities
- Blackstone TacOpps (equity lean)
- Blackrock Opportunistic
- Goldman Hybrid Capital
- Golub Opportunistic
- Victory Park
- Fortress Private Credit
Loan to own / control oriented shops / 363 players
- Apollo PE
- SVPGlobal (has a HF as well)
- Oaktree Special Situations
- KPS
- Stellex
- Monomoy
- Middleground
- Cerberus PE
- Lone Star
- Centerbridge PE
- Clearlake
- HIG PE
- Ares corporate PE
- Wynnchurch
- Gamut
- Brookfield PE
- Searchlight
- Platinum
- American Industrial Partners
Funds that play in secondary distressed (note some have illiquids buckets as well for distressed lending):
- Goldentree
- Brigade
- Beach Point
- Diameter
- Redwood
- Blackrock Credit Alpha
- Varde
- PIMCO
- Nut tree
- Canyon
- Apollo credit hedge fund
- Caspian
- MidOcean
- Sound Point
- Oak Hill Advisors
- Aristeia
- White box
- MM shops
- Garda
- Aurelius
- Oaktree flagship
- Silverpoint
- Attestor
- Centerbridge
- Angelo Gordon
- Glendon
- Contrarian
- Taconic
- Sixth Street Fundamental Strategies
- Sculptor credit opps
- Fidera
- Bain Distressed
- CarVal
- Castlelake
- CQS
- AS BirchGrove
- Marathon Asset Management
- Cross Ocean
- H/2
- Fortress
- Marble gate
- MHR
- KKR Opportunities
- Monarch
- Solus
- Kennedy Lewis
- Farmstead
- Arbour Lane
- Eos
- Ellington Credit OppS
- Third Point
- Senator
- Baupost
- Elliott (including twice)
- Luxor
- HG Vora
- Davidson Kempner (credit focus)
- Farrallon
- Appaloosa
- HBK
- Empyrean
- Q Investments
- Bardin Hill
- Abrams
- Owl creek
- Antara
- King Street
Need to drop in
- Fitzwalter
- Atalaya
- Arena
- Avenue
- Siguler Gulf
Missing Nancy Pelosi in event driven and SBF in loan to own
Pls fix.
Jokes aside, great compilation. Thx!
SBF in a levered loan to own vehicle.
Highly levered.
PIMCO also does minority equity and special situations
Apologies for asking an intern question but what is an event driven hedge fund
Investing generally around significant corporate events (includes bankruptcy/restructuring but also merger arb, spin-offs, other corporate transactions that are mispriced by the market, etc.)
thanks for doing this. Genuinely helpful thread
Great list very useful! GS MBD also has a big fund +10bn that does minority equity/pref special sits investments.
A lot don't clearly fit into a specific tier, but cool list nonetheless. For what it's worth, I don't think any evergreen fund has a strategy where the majority of the theses involve taking a company through bankruptcy (and certainly not for many in that tier).
That’s pretty helpful and interesting to see some names that I had personally never heard of. SB’d - WSO should have more content like this.
Following
HIG PE – Pretty sure they do more deep value/carveouts as opposed to actual distressed? Their core LMM/MM strategy seems to be to deploy quite a bit of capital into a fuck ton of deals very very fast. Extremely sweaty, but impressive.
RE: MidOcean, do you mean the MM PE firm? I don’t think they do turnaround/distressed either. They botched a make up company and the execution there was objectively awful. Would be shocked if they had any sort of turnaround/distressed focus given they fucked up so much 101 stuff. The advisors they brought in too sucked.
MidOcean has a 7bn credit platform adjacent to PE team that does stressed / distressed among other things.
For HIG, it’s more that they play in deep value so my understanding is that they look at some distressed assets I’ll move them to the unknown category as I am not sure all boxes Bayshore plays in.
Ah good call, didn't realize it.
RE: HIG, yeah the core PE fund(s) are basically what I described. Not sure about the other funds they have.
Any detail you can provide behind the botched makeup deal? What did they do wrong?
Their actions once the company trended sideways did not make sense to me. Neither did the advisory team they built out or interim CEO. I don't think they had a strong understanding of exactly what they were buying or how to operate it, as it was not a vanilla consumer brand.
How do you go about differentiating turnaround from distressed? I'm familiar with distressed but not too much about turnaround, so curious to hear your thoughts on that.
Turnaround associated with controlling the company and doing what needs to be done operationally to make the company successful.
Distressed implies you don't need control per se. You might attempt to push the co around with a specific type of position you take, but you might not be in control of day to day operations.
Genuinely curious bc an alumni a few years ago did this. Is an early career out of undergrad at a distressed fund worth it (or even 2-3 years after as an exit)? Are there pros to giving up the traditional IB or bust idea to go into this field? I definitely see how doing IB first gives you greater optionality, but wondering if going directly into a fund and getting a 2-3 year head start over the IB guys is worth it, or if it should be avoided.
This is a sliding scale.
For example I’d rank MM IBD analyst at H/2 PJT RSSG analyst probably Silverpoint analysts for first gigs out of college. Ultimately if the role you are looking at is the exit opp you want, then do that but if it’s not, banking gives a bit more optionality.
Note I personally skipped banking but didn’t move to finance until a couple years out of school so take my comment there with a grain of salt.
Is this based on personal experience? Because as a general rule of thumb, direct investing experience opens more hedge fund doors than banking experience, including whichever groups you consider to be most prestigious.
What do you mean by equity lean? Does that mean that even though they are special sits, they mostly do debt/ pref equity deals?
More like they do a lot of structured equity / minority equity type deals.
got it, thanks!
.
Bro when Kennedy Lewis first opened one of the partners sugar babied my gf at the time (total sloot, insanely hot). Devastated at the time but now I wonder if the guy would sling me a sweet gig?
How exactly would that conversation go in your head?
Isnt Monomoy and Middleground more of a value buyout shop?
Yeah comment there is that they both play in 363 sales and the like. I know for a fact monomoy also has distressed securities on their books.
CarVal is L/S credit if I'm not mistaken, Fitzwalter is similar to APO PE / Platinum, Bain Corporate Distress is a bit of everything (loan to own, minorities, pull to par, pure PE plays, even long equities), Cyrus similar to Bain but they don't do pure PE (great shop btw)
Bain's DSS funds aren't specifically corporate focused, also a good chunk of real assets in there too (real estate, NPLs, aviation etc). Flexible mandate as you've noted, and has invested alongside PE on certain transactions (Virgin Australia for example).
Yeah that’s why I specified corporate, to not mix it with NPL / RE which im not familiar with. Re the PE plays, they actually run deals themselves sometimes (know for sure they did a couple of processes in the UK)
CarVal have multiple strategies...not just L/S credit
.
There's many funds on here that do all flavors / multi strategy credit offerings. Bucketing into one or the other doesn't really make much sense at all as much as the intern or 1st year RX analyst wants to force a square into a round hole.
Glad someone said this. This sort of broad categorization is inaccurate and imprecise enough to really not be that useful for any practical purposes (like recruiting), and is directly misleading in many instances. There is much less distinction among most of these funds than implied. Also, even the categories themselves don’t make much sense. “Going to bankruptcy is the thesis” is silly and absolutely doesn’t apply to a significant portion of those funds’ portfolio. Those event driven funds dabbling in credit is very misleading as some of those funds core product is corporate credit (DK) and most of the others have dedicated credit teams and historically are big players in stressed and distressed credit.
This is again suppose to be an open discussion so feel free to suggest alternatives. If you think a multi-strat bucket is best, happy to add and I get why certain funds make sense there but I’m more trying to avoid moving firms that have like a 10% secondaries bucket being “multi-strat” when all they effectively do is stressed private credit.
if it’s too misleading I’m also happy to hold as just a decentralized list or delete if that makes more sense.
lmao Nut tree under the Liquid focused stressed / distressed category
Where would you put them?
.
I reworked it to be secondary distressed focus, privates focused, loan to own focused or not, idea is still more around analysts are focused on performing edged or more stressed. I still view Goldentree as a credit alpha type experience since analysts spend a lot of time on performing credit which is a much different experience than a firm like Glendon, despite Goldentree being likely as sophisticated as a firm when they do make it to bankruptcy.
Similar to why Oak Hill was originally in process driven because they have their distressed horizontal team.
.
.
Can move Atalaya and Arena to 'Primarily private distressed lending / minority equity' and add BC Partners Credit, Silver Point Finance, and Monroe Opportunistic Credit to that bucket as well.
What’s your view on distressed / special sits lending as a career path?
Some big names missing. Probably add Benefit Street Distressed in the first section with the more private credit type players. Benefit Street as a whole is like $40bn credit shop, with like $25 of that in private credit and $3 in pure distressed, similar to Owl Rock's profile. Anchorage shutting down its hedge fund but still has big distressed pools of capital. you've got Redwood and Nut Tree but missing Knighthead. Appaloosa still going on. Everyone's favorite Chatham.
CQS doesn't do distressed anymore. It's mainly performing CLO, Loan funds and HY. I don't even know what the main hedge fund does anymore.
Super helpful
Not familiar with distressed investing. What does 363 mean and what type of investing is it?
Section 363 asset sale. I think Google can take it from there.
Do any of these funds take sophomore summer?
Also need to add some smaller shops:
Origami Capital
Serengeti Asset Management
Are you familiar with what Origami does?
Who are the major BSDs at these places. At a lot of these firms, the investments are run by a team of just a few people and/or overseen by 1-2 partner / PM(s). Who's particularly impressive? Always find it entertaining to try to read about some of these folks if articles exist on Institutional Investor, FT, WSJ, etc.
Appaloosa - The same guy who traded for Sam Darnold and Baker Mayfield
Angelo Gordon - Ryan Mollett
Apollo - Jim Zelter/John Zito
Aurelius - Mark Brodsky
Attestor - Jan Peters
Bardin Hill - Jason Dillow
Brigade - Don Morgan
Canyon - Josh Friedman/Mitch Julis
Diameter - Scott Goodwin/John Lewinson
Elliott - Paul Singer/Jesse Cohn
Fortress - Pete Bridger/Drew McKnight
Glendon - Matt Barrat
Goldentree - Steve Tananbaum
HG Vora - Parag Vora
Kennedy Lewis - Darren Richman/David Cheyne
Knighthead - Tom Wagner
King St - Justin Gmelich
Mid Ocean - Ted Virtue
Monarch - Adam Sklar
Nuttree - Jes Nussbaum
Oak Hill - Glenn August
Redwood - Ruben Kliksberg/Sean Sauler
Sculptor - Jimmy Levin
Silverpoint - Ed Mule
Sixth Street - Alan Waxman/Clint Kollar
Trash
Elliot is Dave Miller for credit - definitely not Jesse Cohn who does equity. Source: Elliot website
If you don't know, don't Google stuff and pretend you know
Most of these are just founders or CEOs, not day-to-day leading investments, and in some cases not even the point person for their respective distressed strategies...
How is ares special opps? Saw they had great returns and fundraising so far…
If you are talking about the Scott Graves/Craig Snyder team - good people, small team, started at the right time from an op set perspective, and have a lot of deal from from the rest of the house. Ares is also a fundraising machine.
Thanks for the reply! Any idea how their reputation is in the market? Exit opps? Culture?
wonder why scott graves left / where he's going to
What are the main headhunters covering these funds?
How does DE Shaw credit opportunities fit here? Heard they have a distressed mandate
.
Sounds like BS
Is this the team that also does illiquid distress / private credit deals at DE Shaw too or is that a different pocket of capital?
How does GSO fit here?
GSO (i.e. BX credit) does almost no true distressed investing anymore. They've shifted the strategy significantly over time to almost solely performing private credit/direct lending since their acquisition, and most, if not all, of the distressed guys that made GSO famous in distressed have since departed. Given the sheer size of the platform I wouldn't be surprised if they have some pockets of capital geared toward distressed on an opportunistic basis but it's not an area that the platform/firm's leadership wants to be devoted to at all anymore.
work here now, above poster is correct. Mostly direct lending, but various groups (I.e. energy, capital solutions) have ability to invest across cap stack across distressed / special sits.
It's interesting. The energy people who blew the place up in 2014-2017 are now somehow in charge of it. #politics
“Can” and “will” are different. They won’t do it even when opps present themselves as the talent isn’t there to think in a contrarian way. Cap Solutions also has major fund constraints due to legacy of key man departures in the past and haven’t been able to offer competitive terms in rescue space for a while.
Could probably add Atlas Holdings to "Loan to own / control oriented shops / 363 players"
How do the big LOs fit in here? Yes, I know often times they're par holders and not distressed by choice lol but I also believe that some Boston LOs/Nuveen were hiring distressed analysts recently - is this for a distressed book or more workouts type role?
The latter
Thoughts on the Boston funds? DDJ/Polen, Bracebridge, HIG etc
Kennedy lewis is more like blue torch ... also wouldnt use '363 players' to delineate anything (can be standalone reorg or 363 as a means to get control... the difference is the big funds like Oaktree/Elliott/SVP etc raise longer duration capital and can be illiquid, so they can see through a turnaround, and are big enough to lead steerco's/rights offerings/design & participate in backstop economics)
Arena/Atalaya/Metropolitan/Castlelake (besides small corp securities team for Castlelake) etc are more asset finance focused (NPLs, royalties, IP, aviation, RE, etc.)... can say the same for CarVal too (similar to Castlelake w/ twin cities origin, asset finance legacy, etc.)
Arena will do distressed for control / minority equity / corporates and have a liquid markets team
Can't speak to Metropolitan but can confirm Arena, Castlelake and Atalaya all have decently sized corporate teams (and ~15%+ return hurdles generally imply skew toward distressed for control/minority equity/turnaround situations as opposed to more vanilla MM LBO financing) and liquid/public markets teams
Would add multi manager shops (Citadel/Millennium/Balyasny/ExodusPoint/Verition/etc.) too
*new issue flippers
My bud is at one of these shops and he's in Serta Simmons (debt to equity swap) and BBBY.
Thoughts on Silver Point’s private credit team (Silver Point finance)?
Bump
re: monomoy I believe they are just regular PE and not distressed anymore
They did the Jason Industries transaction in 2020 so at least still dabble.
Is it possible to get some sort of tiering or subcategorization for that 3rd bucket? Lots of firms in there. Specifically looking for color on the multistrategy funds listed that are more under the radar vs KS, DK, Goldentree
Blackstone TacOpps never does distressed and Goldman hybrid capital is an absolute joke.. It's an insult to any distressed strategies here. All the legacy SSG people have left since the merger of the group, and pretty much everyone in that group now came from the Merchant Banking Opportunistic Credit team. The caliber of people there has declined to the abysmal level. On top of that the group manages $18bn these days, which means they are becoming more of a direct lender, doing acquisition / sponsor financing type of deals rather than working on true special sits/hybrid capital types of deals. Although the fund does have a public pocket of money for secondary stressed and distressed, but it's just not an efficient way to deploy capital when you're looking at a $500mm tranche of term loan or sub-$3bn capital structures. Plus, goldman cares so much about the reputational risk that it could never be active or super involved in a restructuring or bankruptcy process. Not to even mention that, almost nobody in that group these days has proper restructuring / workout / distressed skillsets
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