I work in research and investment analysis, as a generalist in the private market, I have evaluated equity and debt products/investments. Personally, I am definitely more in tuned with the debt side, I find it more interest and more intuitive. That said, distressed/special situation investing would be something I am interested and willing to consider in the long term.
How does one become a distressed debt analyst? Any pre-requisites to get into leveraged finance and restructuring? I would also like to start investing, with real money, in distressed debt, what are my options as a individual/retail investor? Are exchange traded debt a good option? Alternatives?
Also interested
Nothing? More compelling the reason to get into a space that is under-recognized
Well you seem I have a decent background in credit. No real revelations here... Talk to headhunters and try to convince them you can lateral into distressed debt. It's different than other credit since most is legal mumbo jumbo and driven by legal decisions. It's probably a good idea to learn everything that available out there about distressed debt so you can speak about it intelligently, right? Otherwise it will be hard to convince someone to hire and pay you good money if you know nothing about distressed.
It's not that easy to personally trade debt if it's 144a.
Prerequisites include an Ivy League or similar background or one hell of an ability to network. Most distressed debt is event driven, meaning successfully navigating the field would take an excellent knowledge of the macro and micro economy, domestic politics, the Federal Reserve, banking, federal and state law, foreign law, world politics, foreign policy, management, personalities, competitors, etc.
There's a reason the wealthy delegate this type of investing to the best of the best. It's super complicated, but the top investors can provide excellent returns for relatively low risk.
Great. Thanks for the input guys.
Is it possible for a retail/individual investor to dabble in the distressed Debt market? I have heard that Exchange Traded Debts are a good way to access the debt space. wondering if this is true. any suggestion on other ways to invest in the distressed debt space as a retail investor without proprietary access would be graet.
Yeah, there are websites that track what the top hedge funds are doing, so you can try to mirror their investments.
SB if you're willing to provide a website or two...I can't tell if they website is trustable or not...
i think you need to actually read up on what exactly is involved with distressed and your question about retail investors will be answered quite quickly
AlphaClone, Institutional Investors Alpha, Whale Wisdom.
You cannot mirror DD HFs. It is not a retail market
If you want to read about DD: http://www.distressed-debt-investing.com/ http://www.distresseddebtinvestorsclub.com/ and Moyer's book: http://www.amazon.com/Distressed-Debt-Analysis-Strategies-Speculative/d…
I have been looking at the Distressed Debt Investor Club as a member guest. Accessing the investment ideas, I see lots of pitches for $5 equities..., while some of these pitches seems to work great. I am wondering how effective they are to implement in practice since the Bid/Ask spread for some of these small caps are so high.
There are some debt stuff posted on the site, but I can't seem to ways to access them. so I guess this means one really can't implement a distressed strategy...
what are you talking about? This isn't the 90's with 1/4 or 1/2 point spreads. If you want to buy some equity in a "distressed" entity, go buy it. Sure you may have to start paying some extra fees once you get into penny-land, but its not any more expensive (disregarding risk) than trading other stocks.
It's really just not worth it and not realistically feasible to be a retail distressed trader. You don't have access to the legal info and sources that drive a lot of the price action. Are you insisting on this so much so that you can PA trade distressed to show a hedge fund that you put your money where your mouth is with your distressed ideas?
no, just interested in the strategy because of the staggering returns I have seen it produce by various hedge funds. It would have been great if this profitable way of investing could be implemented without proprietary structure.
In addition in aiming to be eventually involved in a strategy that makes money, I would ideally want to be in a strategy that doesn't rely too much on corporate structure. If I am involved in a esoteric way of investing, I become at risk of being too dependent on a corporate structure or a specific company and its resources. If I can implement a strategy without the need of special access, then all I need is my knowledge, nothing else.
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