Incoming analyst at a credit hedgefund - how to prep?

Thanks in advance for everyone’s input. I am a 2nd year banking analyst in a fairly modeling intensive EB coverage group. Landed myself a credit hedge fund role during oncycle last year which was more of a lucky draw as I did not know anything about restructuring or credit investing besides having had read a few chapters of Moyer and a lot of literatures about the space. My interviews were tough but I was articulate enough so perhaps got hired on the spot given that (for example, case study prompt was asking where you’d invest in cap structure, but I built a fairly detailed operating model and spoke solely about the business during debrief as I don’t quite know about the credit aspect of things).

Im very interested in the space and learned about restructuring model via wall street prep, but am a bit panicked about my next job. What should I read and do to set myself up for a credit hedge fund? (strategy is a mix of event driven and distressed).

3 Comments
 

Based on the most helpful WSO content, here are some recommendations to prepare for your role at a credit hedge fund, especially focusing on event-driven and distressed strategies:

Books to Read:

  1. "Distressed Debt Analysis" by Stephen Moyer:
    • This book provides a comprehensive overview of the bankruptcy system and the mechanics of distressed debt investing. It's highly recommended for understanding the fundamentals of distressed debt.

Blogs and Online Resources:

  1. Distressed Debt Investing Blog:
    • This blog offers in-depth analysis and updates on the latest distressed companies in the market. It can help you stay current with industry trends and technical aspects of distressed debt investing.

Key Areas to Focus On:

  1. Credit Analysis Skillset:

    • Polish your credit analysis skills. Understanding the differences between equity and credit investing is crucial. Focus on analyzing the capital structure and determining where the value lies within it.
  2. Understanding Capital Structure:

    • Learn to decide where to invest in the capital structure (e.g., bank debt, bonds, equity) based on cash flow and downside potential. This will depend on your fund's mandate, risk tolerance, and time horizon.
  3. Restructuring and Bankruptcy Proceedings:

    • Familiarize yourself with bankruptcy proceedings and restructuring models. This knowledge is essential for distressed debt investing.
  4. Technical Skills:

    • Ensure you can create and analyze cap tables and understand the overall corporate structure, including covenants and collateral.

Practical Steps:

  1. Read Investor Letters:

    • Reading letters from smart investors can provide insights into capital structure theory and investment strategies.
  2. Work on a Pitch:

    • Practice creating investment pitches. Demonstrating your understanding of credit-specific factors and making informed recommendations (even if it's a "pass" due to downside risks) will reflect well on you.
  3. Brush Up on Accountancy and Valuation:

    • Re-read key texts like "Investment Banking" by Rosenbaum and Pearl to strengthen your accounting and valuation skills.

By focusing on these areas and utilizing the recommended resources, you'll be better prepared for your role at the credit hedge fund. Good luck!

Sources: Distressed Debt Hedge Fund out of College - Prep Advice, https://www.wallstreetoasis.com/forum/investment-banking/how-to-prepare-for-restructuring-technical-questions?customgpt=1, Best books to read to get me up to speed at a distressed debt hedge fund?, How to Prepare for Restructuring Technical Questions, Private Credit Resources and Prep

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