Hey yall - I am an analyst at a top RX group. As I navigate the switch to buyside, I have come down to 2 paths: (i) distressed/stressed public credit HF like Elliott/DK/Silver Point (ii) special situations private funds like Apollo HV / BX tac opp / Sixth St. Would love to have yall weigh in on how to choose 1 vs the other. Couple of thoughts that I have right now:
HF route is likely an exit to private spec sits funds. If i end up wanting to go down distress investing, why do spec sits for 2 yrs then jump to HF when i can get started in HF right out of banking?
Dist. HF might limit my optionality if i find it not my cup of tea later on. Although rn i am very interested in their style of investing and the analysis they do, i can't say 100% that i think i can make a career out of it. So if i end up wanting to pivot , would spec sits be better than HF for optionality sake?
As of now, i prefer special sits/dist. HF over vanilla PE types of investing. But IMO PE is a larger space with more opportunities both in terms of investment and career. Would it be possible to pivot back to traditional PE from a special sits/HF? Appreciate everyone's thoughts/critiques here. Do my above thoughts make sense? Anything else that I should be considering? Are there questions that I should ask myself to make a better decision here? What are some benefits / considerations for each path? Thanks again
Based on the most helpful WSO content, here are some insights and considerations for choosing between distressed/stressed public credit hedge funds (HFs) and special situations private funds:
Key Considerations:
Career Path and Exit Opportunities:
Optionality and Flexibility:
Personal Interest and Long-term Fit:
Questions to Ask Yourself:
Where are you most likely to win?
What is your comparative advantage?
What is the right next step for you?
Benefits and Considerations for Each Path:
Distressed/Stressed Public Credit HF:
Special Situations Private Funds:
Final Thoughts:
Your current thoughts make sense, and it's important to weigh the benefits and considerations of each path. Reflect on your long-term career goals, personal interests, and where you believe you can excel. This will help you make a more informed decision.
For more detailed discussions and advice, you might find the following WSO threads helpful: - https://www.wallstreetoasis.com/forum/investment-banking/advice-from-an…</a">Advice From an Advisor to Senior Wall Streeters - https://www.wallstreetoasis.com/forum/asset-management/thinking-like-an…</a">Thinking Like an Investor
Good luck with your decision!
Sources: Thinking Like an Investor, Advice From an Advisor to Senior Wall Streeters, Advice From an Advisor to Senior Wall Streeters, Help. Feeling Lost, QUIT vs. STAY - A better way to think about it.
Bump
Just make sure you diligence the SS group/firm a lot and know what you are getting into.
Very broad term that really doesn’t define a specific strategy and some SS groups even look at very little distressed situations.
some like tac ops doing primarily (pretty boring to me at least) pref deals, some primarily private/opportunistic credit, others more private control situations like KPS, and some have more of a combination of liquid and illiquid for control like SVP or Oaktree SS. Some do a mix of everything.
SS (depending on the specific strategy) will give you more optionally and a bit more of a traditional diligence experience. Whether or not you can easily transition to buyout from specials sits depends on the fund. From a KPS, Oaktree, SVP style strategy it would be easy. From a tac ops style it would be more difficult.
OP here. This makes a ton of sense. SS strategy across different firms is a bit of a black box. I think the ones I’m interested in is mostly capital structure solution-ish deals. So anything that hits 15% but mainly non-sponsored unsub financing, asset back financing with S + 750-1000, exit financing, some annuities/royalties. The reason why it’s attractive to me is the highly bespoke and structured nature of their investments. Creativity in structuring LME transactions is probably my favorite part of rx.
Bump also interested in thoughts between paths
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