Difference in investment strategies between distressed Hedge Funds and distressed arm of PE megafunds?
As per above, I was wondering what are the main differences between the investment strategies of the shops above. For example, what is the difference between what they do at Elliott/DK and what they do at Apollo? If you had a job interview with a top HF in the distressed space and were asked such question, what would you say?
I understand MF have more locked capital etc., but I am interested in the actual job and in what the differences are between the investment strategies that they use at each place.
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bump ^ would love to hear this as well
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While there are no bright lines...a distressed HF will likely do a variety of things - stressed bonds/loans, distressed bonds/loans, distressed for control, CDS, shorts, cuspy names that aren't even stressed but high coupon, levered equities, etc also a hf might use leverage....whereas as distressed credit arm at a pe fund is likely doing more pure play distressed for control, more concentrated, less trading. Also deal size will be large/larger cap at the MF whereas a distressed hf will be all over the map. These are directional statements not 100% accurate for every single firm as no two firms are alike.
edit: also, the HF will likely get comfortable with a name faster and deploy capital faster, in and out (if necessary) and continue to do diligence will adding to the initial position, whereas a PE arm will likely be much slower and have a full investment committee, etc, and thus will miss out on a lot more opportunities, which can be frustrating. The HF manager likely thinks more about probability of returns, ie not everyone is a gonna be a winner, but the PE managers are more with the mindset that everything must be bullet proof.
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