Joining a distressed HF now (2022]
I'm an A1 at an EB Rx. Is now an optimal time to join a distressed HF given upcoming recession?
May 31, 2022May 31, 2022
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Comments (33)
I'd say it's an optimal point to be at an EB in RX lol, from what I've heard you don't need to exit by analyst yesr in order to exit unlike people who are gunning for PE.
If you want to join a distressed HF, don't worry about timing it. The skillset is a lot different than IB (at least in my case, I also joined from EB RX) and typically first few years junior comp is in a relatively tight band unless the fund blows up or does crazy well. In my personal experience the pay is much better and while the day-to-day is more stressful, the hours are much more predictable and reasonable. Obviously depends on the fund tho. Good luck
I would not worry about timing. You may want to consider whether the fund is pure play distressed focused or has a broader, multi-strategy approach that leans into distressed when opportunities arise. I mention this because distressed is cyclical and funds get into trouble when they have a narrow mandate and few opportunities to chase; dollars are allocated towards less compelling opportunities because they need to be deployed. I personally find it much more interesting to trade multi-strat because different things make sense at different times in the cycle, distressed being only a cool thing to do at certain points in time, and view it as a better learning environment for young analysts who benefit from exposure to various types of strategies.
No OP but I resonate a lot with your take. Can you provide some examples of funds where you're able to do that?
The reason I ask is that at least during recruiting there's a bias towards sticking to one strategy (when discussing with headhunters for instance), so I'm curious on how positioning works for seats in such funds.
Thanks!
I've had the opposite experience with headhunters; a preference for multi-strategy / special situations mandates is a perfectly reasonable answer. HHs don't like it if you hem and haw or say you're interested in whatever they have, so they will know what to do with an articulate reason why flexible mandate.
Apollo, Goldentree, Diameter, King Street, and then depending on what "team" you are on at the fund which may interact w the cyclicality issue mentioned above DK, Oak Hill, Oaktree, Elliott, and others all have strategy specific groups. They are "all weather" but not by sector - by asset class - whereas the first four mentioned the research teams flex from performing to distressed.
Any of these types of places hiring now for junior seats? If not when is on cycle?
My understanding was that Apollo, Diameter, KS all have separate silos that work on CLO and par credit stuff vs. special situations. Diameter was specifically going on a recruiting drive for people to work on their CLO platform recently if I recall. Apollo also has "event-driven" teams that are separate from sector coverage teams that tend to focus more on performing credit (but helps out on distressed as a secondary resource on names they know well). King Street seems to be similar where there are distinct "HF Analysts" and "CLO Analysts"?
The clo teams work on par clo loans. The hedge fund analysts cover their sectors from across ig-hy-loans-distressed.
The above two comments are generally correct about the firms in question (I know people first hand at each of those firms and can confirm). Goldentree also separates at least partly by asset class (equities and credit, at a minimum).
It's also partly why the comment below about being extremely sensitive to seat and firm are important (and indeed, it's not entirely correct that the research team flexes at the mentioned firms).
It is true that there are firms where the teams are sorted by sector, and the same research team does the full stack - i.e., the consumer analyst covers distressed, new issue, private credit, and equities - there is truly only one research team in this setup. That's what you're looking for, and you can find it if you ask.
I have been pinged for Diameter, King Street, and Oak Hill's distressed team all in the last two months or so.
Redwood and Glendon seem to come up here and there as well.
EDIT: Adding some other distressed players that I have been pinged for recently as well, poster below is right on different approaches for each.
- Silverpoint,
- Onex opportunistic (startup),
- Senator Credit,
- Sixth Street Fundamental Strategies,
- Ares Special Opportunities,
- Carronade (startup),
- FitzWalter,
- H2.
This is a fair (and helpful) list.
I would just add that these are all extremely different places to work in terms of culture, mandate (in any given seat), comp, etc. - they are indeed competitors for talent (in that a headhunter would call generally the same set of people on these searches) - but seats are very different from firm-to-firm.
Thanks I would tend to agree. Say I'm currently in a liquid credit or direct lending seat: how would you suggest going about deciding between different strategies like distressed, l/s, etc ? I want to convey to headhunters and interviewers that I'm seeking a more flexible "all-weather" strategy (ideally king street, Davidson kempner) but don't want to come across as not knowing exactly what I want. Just working on framing my story correctly
Thanks, I'm OP. Any insight into culture for any of these?
Who does SP use for their HH?
What type of firm are you currently at?
Looking to understand what kind of seats generate these inbounds
Opportunistic credit / SS at an UMM platform.
Excellent podcast with one of the founders of Diameter, would recommend for anyone working in or interested in credit. He discusses their multi-strat approach which can allocate to distressed when the opportunity set is there and do other things when it's not
https://capitalallocators.com/podcast/diameter-capital-partners/
Following - Credit Funds
Any word on recruitment picking up for any of the shops mentioned here? Also would be helpful to put the HH covering. Thanks!
I know Oaktree (except Special Sits) and SVPGlobal are Oxbridge for on-cycle. OSP handles off-cycle for certain groups for Oaktree
Bump (2023)
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