I’ve learned a ton from this forum over the years. I want to give back with this Q&A – no private messages.
Background: European, STEM undergrad, analyst at a distressed PE, MBA, Ivy League alumnus.
Current: associate at a distressed credit HF (20%+ per annum since inception). Secured, unsecured, sub, prefs, etc. Generalist. Two strategies: public and private markets (primary & secondary). We can do loan-to-own as we have locked up capital.
| +23 | % of pods making 9 figures consistently? | 29 | 21h |
| +13 | Fastest Way to MMHF? | 6 | 5h |
| +6 | Credit HF Guys: How much do you think abt "value" | 7 | 2d |
| +6 | Bad PM | 3 | 3h |
| +6 | Average single manager slope | 2 | 1h |
| +4 | Amakor Capital - Who are these guys? | 2 | 4d |
| +3 | 4 YOE in ER & 30 years old | 5 | 2d |
| +2 | Walleye SA 2027 | 4 | 3h |
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What’s a day in the life for you? Time you start till time you end?
Also, if you could recommend only 1 book for someone who would like to try to break into the role. Which would it be?
It starts checking the news on names we have a position. After that, I (i) update models/valuations, (ii) catch-up with advisors/traders and lawyers in live transactions, (iii) and/or have meetings with portfolio companies. Additionally, I source new investments through my network. Some days I hold calls with prospective LPs that are doing DD on us.
This workflow is disrupted in the closing of private investment as my schedule is more restricted.
One book every new employee is required to read is Distressed Debt Analysis by Stephen Moyer.
1. Hotels and industrials impacted by COVID
2. On the public side I'd say 20% generated by me, 30% by traders, and 50% by my bosses. On the private side, 90%+ sourced through advisors.
3. 8 am to 7 pm without live deals on the private side. Whatever it takes with live deals.
4. We split the job with a partner: we focus on the financial restructuring, and the partners focus on running the business. The partner is required to invest new money subordinated to our position. We love to make great operators rich.
5. In terms of hard skills I learned as an analyst at a distressed PE – keep in mind I did not work at IB/consulting. I had to do everything with little oversight and no support from senior members. In terms of soft skills, now I'm learning more about how to create a firm and run a business.
How do you play the distressed game without necessarily being the one driving the process (i.e. doesn't own enough to influence the situation)?
You are not incorrect, but there are lots of ways creditors within the same class can get screwed by one another and I think its dangerous to assume that you are automatically aligned with another investor just because you hold the same security or even in the same ad-hoc group. Even if you are in the creditor group, you can still get screwed over by an aggressive steering committee who will have more sway with the group's legal counterparties holding the pen to an RSA or other proposal. For example, you may technically have the opportunity to participate in a rights offering or other new money plan, but unless someone is on the ball you will miss out on the incentives given to the bigger creditors who are able to back stop the plan. Not to mention the issue of one or a small club of large creditors having the ability to give consent from your class on a priming deal that you can't participate in. The fact is that if you're playing in MM or larger distressed (> $1bn debt), there is not much you can do but go along for the ride if you're only showing up with $20mn - 50mn holding sizes, or are generally unable to write checks for new money deals. Unless you make a point to be overly aggressive with aligning yourself with someone larger you're probably not going to have the best time in the world and the restructuring process turns into much more of a time sink / observation process than value creation opportunity for you.
This guy started an AMA and his only response thus far has been "I don't know, sorry". Lol.
Moyer, fabozzi, distressed debt investing blogspot and the Best interests blog