Good credit funds?

Just starting out here and I'm thinking about recruiting for credit funds next year. What are some of the leading firms, and why do people think they're great? I've heard these names a lot but don't know much about them... was originally sold on private equity and so don't know much about what makes each credit fund special. What do they tell LPs about their "secret sauce" and how true is it?

 
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Mostly they are excellent at structuring, finding the right spot in the capital stack and going with a fine-tooth comb through the intricacies of each particular deal point. Many of the best credit investors have law degrees. A lot of the big players are chasing their tail a bit with a limited amount of high-yielding deals. Oaktree by definition is participating on most every distressed deal due to their size and limited amount of large double-digit yielding paper. Elliott is mostly an activist equity shop now (again very hard to scale credit investments). Your list is mostly excellent funds but the list of true credit funds is dwindling.

 

Not really true re Elliott. While more of their AUM is in public equities than credit today, they’re still one of the largest and most active distressed investors in the market. They’re a leading creditor in a number of prominent situations right now including Frontier, PG&E, Windstream, and EP Energy. They usually follow the same aggressive activist mentality in restructurings as in their equity trades.

 

No reason for a credit firm to hire from consulting (exception is maybe Bain Cap). Would recommend maybe trying to go for a banking role (lev fin, rx) first. Also all three of the firms you mentioned are very active in distressed but I see what you're getting at.

 

Apollo, while having a big loan business is also massive in PG&E, Petsmart, Frontier, other large distressed names through their distressed hedge fund. Distressed is Oaktree's bread and butter it's definitely not a high yield/CLO shop first and foremost (see Acosta deal most recently). Not really sure about Bain Cap tbh. These firms are just larger and have diversified pools of capital and I don't really believe that it would be any easier to land a job at these firms vs Elliot or DK assuming you're interviewing for a group that does distressed. It is however true that these opportunities are more abundant.

 

I could be mistaken but doesn't silverpoint make all of it's distressed investments from its flagship silverpoint capital offshore fund which is an evergreen fund?

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Also missing some of the below:  

- Redwood (I'd probably work here over every other name mentioned on this list). 

- Knighthead

- Glendon

- Angelo Gordon

- Brigade

I'd also include some of the old school Minneapolis credit shops:

- Castlelake

- Varde

- CarVal

- Whitebox

Summary is that there is a ton of these shops out there. 

 

I'm not as familiar with the credit world as I am equities, but a couple SF (Watershed and Golden Gate, yes Tom Steyer's shop) places and a Chicago shop (Magnetar) come to mind. I think Magnetar might be bigger in commodities/energy derivatives but not sure.

Also, ExodusPoint was launched by former head of credit at Millennium and its credit/rates business is larger than it's quant, equities, commodities, macro businesses.

 

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