I watched an interview of George Schultze who says his company maintains a database of companies that they track into distress.
In one post from Distressed Debt Investing he describes poring over any and all bankruptcy dockets 1) out of interest but 2) as a means of potentially uncovering a worthwhile opportunity.
My question is: for those that work in distressed debt, how do you source investment opportunities? If it's not too proprietary, is there anything you could share that would give someone outside the business some insight into what is involved with the day-to-day process of finding your investment ideas?
Thanks in advance.
Having a broad network of professional, independent board members who focus on distressed situations. When it seems like an issuer could be headed into restructuring, a board sometimes will bring in an independent board member who is well versed in helping companies navigate through these situations. These guys will sometimes tip off a distressed guy with whom he has a relationship to do some work on the issuer. It's very much an old boy's club.
Interesting. I had the impression this type of investing is relationship driven given that outcomes are often decided in a bankruptcy courtroom, but did not know to what extent.
Thanks for the response.
As previous commentator said it's an ol boys clubs, and the other most effective ways to do this are so costly ex. WSJ Bankruptcy pro (the only major source that has a subscription for individuals and not corporate is $400 a month and is not that great. A good source however is twitter if you follow names like reorg research, debt wire etc you'll also get suggestions on other people to follow. Only issue is that the info you get is not going to early enough to very good proprietary ideas
Thanks for this. I'll give reorg research and debt wire a follow.
Would you say proprietary deal flow is a reason many lawyers are able to move into DD investing? Is it an oversimplification to say that experienced restructuring attorneys have contacts within law firms or court circuits that give them a jump on nascent investment opportunities?
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