What is the difference between doing distressed investing at an Apollo / Centerbridge vs at a hedge fund like Monarch / Anchorage / York given that top Rx groups send the same caliber analysts to either? And why do top Rx analysts tend to exit to funds like these over a fund like, say, GSO or Ares or Cerberus, which are obviously great funds that are just as active in distressed?
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Anyone?
also interested
I'll take a shot.
First, there's a bit of difference between Apollo / Centerbridge. Most of the top kids going to Apollo are going to do PE (not distressed specifically), while Centerbridge is more split (they generally ask which you prefer from what I understand). For the question you're asking, Apollo doesn't really fit the mold. It's almost akin to asking why BX PE instead of Monarch.
Second, Centerbridge is a safer option than a "traditional" hedge fund. It's bigger and has a lot of locked-up capital (idk if they have an evergreen fund as well, someone more knowledgeable can fill in specifics on CB's access to capital for each strategy). It's a highly prestigious, high-paying, safe job, which is all a lot of people are looking for early on in their career. On top of that, CB does a tremendous at interviewing very early in the process, and generally takes on a lot of associates. If you've just spent 12 hours stuck in their office on the fist day of the on-cycle process, and then you get an offer, and are surrounded by people from the firm selling you on all its amazing aspects, then it's very difficult to turn down.
Third, in contrast to the above, HFs are obviously much riskier (of the firms you listed, York distressed is basically dead and Anchorage has had a brutal few years), hire far fewer people (Monarch hasn't hired on-cycle in years, Anchorage takes ~1-2), and aren't interviewing right as the process kids off (given hiring needs it doesn't make sense to rush the process and get someone you don't want. A bad hire hurts a lot more when you run more lean). However, the HFs have the benefit of better hours (generally speaking), more focus on actual investing (more hierarchical PE firms create more admin work for younger members), and potentially better pay (varies a lot).
On the GSO, Ares, Cerberus point, I think it varies for each firm.
GSO is a tremendous platform, but it's low paying for junior members and the firm is spread very thin across situations because of its size. GSO has made some tremendous investments over the years, and is very good overall, but in a number of situations where I've been involved with them they simply aren't as sharp as some of other players involved.
Ares is hurt by its west coast location, and from my experience is a little better at direct lending and broadly that style of credit investing than traditional distressed. They're best-in class at Direct Lending though.
Cerberus I know the least about. I wouldn't have viewed them as comparable to the other funds we've discussed, but I'm simply not knowledgeable about them.
How does Ares special situations fund compare to its traditional buyout fund?
It's fine. To be frank (and overly general) I think for almost all of the credit arms of PE funds, the credit arm is a little weaker than the traditional buyout business.
Thanks for your answer! I guess my question is what benefit does Centerbridge Special Sits have over a fund like Silver Point besides that it has capital locked. I assume the work you do at both shops will be similar and pay will likely be the same if not higher at Silver Point.
Stability matters a good amount. Eton Park closed, Solus closed, Marathon looks set to close, York distressed is dead, Anchorage is struggling, King St had massive redemptions etc.
You have to make a decision if you want the stability, structure, and broad prestige of a PE firm, or if you want the higher upside and more interesting work of a HF. That's a very, very, broad generalization, but that's the decision at a high level.
It's hard to pinpoint a "fund like Silver Point." All the distressed firms are different in their own ways. There are reasons why someone would be a better fit at Silver Point than Monarch, and vice-versa. There aren't a lot of these funds, they don't hire frequently, and they all have different pros and cons.
For what it's worth, I've interned at a relatively small distressed fund (by aum & head count size), and we've been involved with many situations with both stand alone distressed funds and Mega Fund credit arms. So in terms of mandate, not sure if there really is much of a difference, since the two often either seem to be creditors of the same companies or get involved in the same investment opportunities in different parts of the capital structure (albeit before COVID there was a much smaller opportunity set), or bid against the same assets. But from the associate perspective, I would rather be at a Centerbridge / GSO / Apollo / Sixth Street as opposed to an Anchorage / D. Kemp because there at least seems to be a bit more security, but tbh I don't really know.
Also, i'm pretty sure Apollo associates do both corporate buy out PE and for-control and non-control distressed investing, somewhat similar to Centerbridge associates (all second hand info).
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Also curious as to why we generally don’t see rx analysts at elliott or aurelius? Who do they hire?
The distressed side of Elliott definitely hires RX analysts, as well as analysts from other distressed funds.
The activism/public equities business tends to hire more from megafund PE.
Elliot very rarely hires bankers for the distressed business. It's typically from PE or from another hedge fund.
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