"Investment artist" firms?
Hi guys:
What would you say are some firms that have a culture of being an "investment artists" - aka finding great ways to generate alpha? Baupost comes to mind, what are some names you'd say in special situations /distressed realm?
Thanks
I generally dislike using vocabulary gymnastics such as "investment artist" or "generating alpha" as they don't really mean anything. Seems to just be buzzword nonsense like IoT or cloud computing....
If you're talking about some really interesting plays in the distressed space maybe look at GSO's manufactured CDS trigger with Codere or the numerous sovereign restructuring plays that Singer and Elliott have pulled off. Baupost is known for being long-only deep-value investors (Seth Klarman with his Margin of Safety philosophy).
I think I would have to agree with OP that Baupost is more of an "investment artist". (The specific term is up for debate, but I share the sentiment). Baupost's focus is not long-only. They do everything under the sun. Margin of Safety concept applies to pretty much any type of investing style; it has more to do with asymmetric risk/return or being aware of downside risk.
OK u r right
Whoever runs this blog can be called that: http://clarkstreetvalue.blogspot.com/
Isn't Baupost's style underperforming benchmarks? All these value guys haven't done well since the GFC.
Wtf is an investment artist?
Would not recommend you walk into an interview and use the term "investment artist". Anyway though a majority of the distressed/SS funds that run both open and closed end funds are gonna have flexibility to get into more esoteric, creative trades and deal structures.
I think a better question would be what are some of the best trades you've heard of, rather than what are the funds that execute the best trades.
My personal favorite is the CDS trade from Blackstone that triggered the scandal. Absolutely brilliant play from them.
What do you think of Bill Ackman's "Big Short 2.0"?
Not as enamored with it as the Big Short or the Blackstone plays.
The Blackstone trade took some serious financial engineering and an amazing ability to synthesize what I'm sure is hundreds of pages of legal documents to determine subsequent loopholes. The Big Short took an unbelievable understanding of very complex instruments, coupled with an unwavering conviction in something that was ultimately believed to be impossible.
Ackman was able to engineer a phenomenal ROI with perfect execution of his trade placements, but the foresight to see that a pandemic would blow up cruise/travel/gym/whatever else demand, doesn't seem to be on the same scale for me in terms of difficulty and conviction.
I think Chatham Asset Management’s version of the CDS trade with McClatchy was interesting - rather than manufacturing a default they wrote CDS on one issuer entity and then orphaned it by refinancing the debt via another entity.
Those CDS trades aren’t commonplace anymore, nowadays uptierings are the topic issue in distressed. TriMark, Serta Simmons, Incora/Wesco Aircraft to name a few. Serta Simmons was cool in that the relatively passive CLOs did the deal at the expense of Apollo and Angelo Gordon (rather than vice versa as is usually the case). Incora is a pretty savage one because the Company issued incremental debt to Silver Point and Pimco for them to do the uptiering and then the sponsor, Platinum Equity, primed the remaining creditors as well.
Also Caesars had a string of clever deals between Apollo and a number of different HFs throughout the capital structure to keep that one alive.
Baupost has found creative ways to underperform the market for years and in this way they are a masterpiece that cannot be matched. In a similar style of art is Greenlight.
some others of that "HF anti-renaissance" era with a similar brush style of underperforming the market that others in the WSO museum have referenced: davidson kempner, oaktree distressed
I took "investment artist" = fraud.
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