Distressed Trade Ideas
Hi all, trying to move to the distressed side and looking for some tips on how to go about finding some trade ideas for potential distressed plays.
Any tips welcome on how to profile companies and any leads are most welcome.
Background: have trawled past threads for some of the historical SS / Distressed plays but looking for something more recent or live (public knowledge) which I can try to write out as a simple case study for an interview pitch
Not asking for the actual homework, just need some tips to start looking in the correct direction. Preferably EMEA / Europe based (if possible), otherwise open to all
I have a couple internships in Distressed Funds PM me if you want.
Not OP but in a similar boat. Mind if I DM you?
To dive into distressed trade ideas and build a compelling case study for interviews, here’s a structured approach based on the most helpful WSO content and strategies:
1. Understand the Distressed Landscape
2. Screen for Distressed Opportunities
3. Profile Companies
4. Focus on EMEA/Europe
5. Case Study Development
6. Resources to Explore
7. Networking and Insights
By following these steps, you’ll not only identify potential distressed plays but also develop a robust framework for analyzing and pitching them effectively. Good luck with your transition to the distressed side!
Sources: Is value investing dead?, The Best Sector, Asset Class, or investment idea for 2017 (that WSO didn't know existed), Q&A: London L/S + event-driven analyst, Q&A: Emerging markets investment analyst, How to better understand businesses and articulate investment ideas?
To dive into distressed trade ideas and build a compelling case study for interviews, here’s a structured approach based on the most helpful WSO content and strategies:
1. Understand the Distressed Landscape
2. Screen for Distressed Opportunities
3. Focus on Public Knowledge
4. Profile Companies
5. EMEA/Europe-Specific Tips
6. Case Study Framework
7. Resources to Explore
By following this approach, you’ll not only identify potential distressed trade ideas but also build a strong case study that demonstrates your analytical skills and understanding of the distressed investing space. Good luck!
Sources: Is value investing dead?, The Best Sector, Asset Class, or investment idea for 2017 (that WSO didn't know existed), Q&A: Emerging markets investment analyst, Top firms for distressed investing. Solving for brand and deal experience more than ability to growth within the organization., Q&A: Emerging markets investment analyst
Xerox ‘28 unsecured notes
Or the 2L’s if recent headlines are true
Brightline. Lots of debt tranches here, so there should be something for you to pitch across the capital stack
Probably easier to pitch something that doesn’t have going concern risk . . .
What do you mean? Liquidation ridk?
I recommend looking through new SEC bankruptcy filings every morning. They usually only post ~10/day and of those, it’s easy to quickly divulge which may present an opportunity. After that the hardest thing is to figure out the existing cap stack and what each tranche trades at- I’d use BBG and Pacer. From my experience working in distressed claims, you want to avoid GUCs and legal fees to focus more on BDE and outstanding balances at the lowest tranche. Before that you can look at anything from SPAC treasury dissolution accounts to NAV discounts to book. You don’t have to get creative though; the opportunity comes from discovering the story itself in my experience. I’d also look at crypto and if you can hedge at a better rate than another, that recovery could be phenomenal.
Have a look on Reorg (Octus) and 9Fin - those usually have good coverage of topical names you can look at
Don’t have access to Reorg. Have asked for a trial of 9Fin but any way of accessing them / parts of them for free?
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