Currently an RX analyst interested in the distressed HF space. With how much the landscape has changed in the past years (many once notable names blowing up) would be very interested to hear updated thoughts as to which distressed HF still represent the best seats. How would you compare DK, Elliott, Golden Tree, Silver Point, Redwood, Diameter etc… in terms of best opportunity for someone 2-3 out of school?
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Whichever one lets you work across multiple strategies in addition to distressed, to make it easier to pivot away from distressed asap
Appreciate the reply. Which funds would those be?
You just want to be in a seat that is able to take large enough positions to be in SteerCo. Otherwise you’re just hoping you don’t get fucked
Also RX analyst here - also interested. Just some observation/views of my own below. Feel free to add or correct me if I'm wrong. A lot of distressed credit shops are very small in turns of headcount, so hard to come by opportunity as they don't recruit/churn people every year
Other funds that i know but don't know enough to comment on
aint no way there's a hf called "nut tree"
DK performance = good? They're an asset gatherer benefitting from LP laziness.
https://www.scers.gov/sites/main/files/file-attachments/20240320_-_item… - pg 3
Any view on H/2 Capital Partners?
This is basically all incorrect and highly misleading.
distress = a tool, not an all-weather strategy, even among so-called distressed debt specialists. there's a reason most of funds you mention now have diversified lines of business (e.g., pvt credit, clo, re, pe, structured products), or likely in the boneyard of funds that fancied themselves masters of the universe / capable of earning alpha with swagger alone. great skill but wildly overrated as a specialty imo. you have very smart / sharp-elbowed competitors fighting for pieces of low quality companies in most instances. and distribution of outcomes has a significant lefthand skew. how many hitters are there today in that universe? not a ton... market's also fairly efficient with pricing, and advisors are the ones extracting excess returns. think of this like you would any other biz -->> is that really a good setup for consistently posting alpha?
from your list, sp and mudrick both sharp. gt is a tough place to work but good seat if you can swing it. hgvora, castleknight, redwood, nut tree, knighthead all do pretty interesting stuff. diameter not so much in distress. they're large / very active though so would be a great learning environment at junior/midlevels if youre set on credit. don't forget pods if you want to learn risk management, which is so important
great info. one question: how does your traditional distressed HF (DK/SP) differ from distressed pods in MM? You mentioned risk management - how does that impact analyst's decision making?
Didn’t realize pods ran distressed strategies
it doesnt directly impact you as younger analyst if you do distress at citadel vs dk. it's more like your pm will be a true risk manager, so you will likely work on different types of situations and *hopefully* avoid the junkier stuff that's more prone to blowing up
King Street?
Same tier as Davidson Kempner. Middling returns, survives on dumb LPs.
anyone have insights on knighthead
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