Credit Hedge Fund Info/Help
Ignore title - for context, I did standard banking stint and now have two years experience doing Credit at MF (think APO, BX, ARES). I am looking to move soon to a HF seat still on the Credit side but with a much more flexible mandate L/S across performing, stressed, distressed, special sits, opportunistic, etc. really anything under the sun. I find my current seat to be a bit too slow with not enough time spent on actual analysis and actioning on investment opportunities.
As I try to start my recruitment process, I'm wondering what 1) learning opportunity w/ sharp people and impactful mentorship, 2) intensity/hours and what time in the day you work (market I assume vs late nights), 3) places w/ best culture 4) comp trajectory (from ASO2 to PM ceiling). I am finding that this move likely makes a lot of sense for my career interests/aspirations as a credit investor and think it's worth sacrificing better WLB for learning/interest. As I start the process, here is kinda my watchlist for firms to look out for, please let me know of others that should be on my radar as well as any insights on the following:
Interested as well
Bump. Did you work in RX before?
No, was coverage group. Kinda just ended up in credit, just wanted to move to buy side.
Are you doing direct lending at one of those funds?
Following, am in a very similar position albeit a year or two behind targeting very similar long term goals for similar reasons.
Would add Diameter to this list.
Honestly the only reason I didn't include Diameter is because I loosely know someone there currently who has brutal WLB - apparently they have weekly Sunday morning meetings and have heard bad things about culture. Now I understand this could exist at a lot of the other places on this list which is one of the reasons I'm seeking some info on them...
Do you know what his experience outside of WLB has been like? In terms of learning, comp, etc.
That’s incorrect on the Sunday meetings. I have a friend there - believe they have weekly update emails like most other firms.
Bump
..
would add silver rock, Blue Torch, Centerbridge and MGG
Can anyone comment more on Blue Torch and if possible specifically their Special Sits strategy with respect to what they do exactly, culture/mentorship/people/hours, comp at ASO level and later, etc.?
Their whole strategy is special sits lending. Have 4 funds all dedicated to that.
Culture is known to be tougher - lean deal teams, tougher names, known to always put out term sheets so assume you do a lot of screening work. Situations are also complex and probably have short timelines so hours are likely longer. Assume portfolio work sucks because of the nature of the borrowers and the situations. Really have to fight to do deals and fight to get a way out and keep your head above water.
Strategy is a mid teens return target with tight docs so think about the profile of businesses that fit in there. They do all senior secured so no pref or mezz or any of that stuff.
No idea on comp.
Guy who runs it is very very well known and has been in industry for 40 years.
I’d assume, Great place to cut your teeth if you want to learn and get good reps
If culture is something you care about / value, I would be very careful about Silver Point. I know someone well who works there, and everything about it seems very brutal. Extremely sweaty culture (weekly Sunday meetings, early morning starts and very late nights) and it seems like some of the MD’s are notorious assholes (the stories I have heard are pretty terrible frankly). Pair that with the commute to Connecticut, and candidly it seems like a brutal setup. My sense is that the folks there are very smart, but also very sharp elbowed and it seems like the work culture is toxic as a result.
At this stage career I don’t think you should care much about culture. It is very unlikely you stay at this fund for the entirety of your career. Obviously it is important to find a team (not fund, TEAM) that fits you. But if you use culture as a blanket check box I think you are looking at the wrong things. Roughly half of the places you listed are hiring. But it’s hard to come by seats so you’d be lucky to land any one.
1000% and if I were lucky enough to get the option to work at one of these places, I’d likely take it regardless of culture. That being said I do value other aspects of my life like everyone else and want to somewhat enjoy/like who I work with ..
One thing to keep in mind if you're thinking about L/S credit is cost of funds.
You see at the pod shops, where the capital is highly leveraged, your cost of funds will be netted out of your pnl. So thats anything between SOFR + 50-100bps.
Now if you're doing distressed/special sits, slow moving trades, not v liquid, this means you'll have to take a fair bit of market beta just to hold the position. And the pod shops wont lever it up much. And you're bleeding pnl by holding.
So net net, its not easy to make the numbers work. You're better off at a fund with patient capital, and no daily mark to market. There you have more freedom with the risk.
The pod shops work for v liquid leveraged positions, like futures, options, etc. Thats how you can get the big pnl. Its not natural for cash credit even in distressed.
What do you think about doing private credit opportunities at one of those funds mentioned above (SPC, Canyon, DK, etc.)? Does it make sense to go do that at one of those places vs MF? Or not really because it's somewhat outside of their core/focus?
So all of these shops will have an array of funds and vehicles they invest for. Probably a bunch of patient capital type funds, but possible others as well. And many have very different cultures. I mean GoldenTree is probably a polar opposite to King Street say. All of these shops are good though, with strong professionals.
You want to start your career with good people. Focus on landing in a team of good people, that will explain things, that will let you grow, and give you a healthy learning curve.
GoldenTree culture is notoriously tough, but the pay is good plus people are wicked smart there. As long as you get on Steve T's good side, can maneuver the internal politics, and produce, you'll make big bucks and learn a lot.
If not, you'll be shown the door fast.
Would also add Nut Tree to the list.
Nut Tree is elite - it’s a Redwood spinoff
Yes, I went to Georgetown and once heard Ruben Kliksberg speak at an alumni event - guy was something else entirely, and it seems like the Redwood guys have done insanely well.
Would add Walnut Tree and Almond Tree to the list as well
Would add Third Point and Marathon, but both are notorious for bad culture, high turnover, and the latter is known to pay significantly below street.
So why are you “adding it”. No one in their right mind would ever join Marathon where they pay 32 year senior analysts 400-500k, and horrific culture.
And they just got bought by CVC...
What do the interview processes typically look like/focus on for these roles and what should one expect for modeling test and or case study?
Oaktree, Anchorage, Oak Hill, Beach Point, Sona, Arini, Sculptor?
Info on beach point/oaktree hf strategies?
Oaktree has a value opportunities fund which runs like a hedge fund. They went activist on a company in 2024. Pretty good returns. Apart from that they have their flagship opportunities strategy and more control oriented special sits strategy.
Would also add Peanut Tree and Hazelnut Tree to your list, top tier funds
Unbelievable Pine Tree snub.
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