learning distressed/special situations investing

eresearcher's picture
Rank: Baboon | 167

how hard is it to learn distressed debt? my goal is to go to a distressed/special situations hedge fund, and i'm in ER right now. ER doesn't really prepare you for this so i wanted to see what thoughts people had.

[let me preempt anyone who says it can't be done from ER. I realize it's harder than with other backgrounds but I think it's worth a shot to pursue.]

i'm guessing everyone will say read "distressed debt analysis," but what else can does everyone suggest?

what will interviews be like? is there anyone in this kind of shop who can comment on what it's like?

Comments (3)

Mar 9, 2011

http://www.distressed-debt-investing.com/ is a great blog on the subject.

I would start by reading the pre- and post-emergence filings of a company that went through bankruptcy and researching any concepts that you aren't familiar with. SSCC might be a good option since there's a lot going on there.

With the exception of someone from a restructuring background and/or lawyers, I don't see why ER would be less viable than others for a move to a distressed fund. At the end of the day a key part of distressed investing is figuring out the intrinsic value of a company, which isn't so different from ER, and then determining which parts of a company's capital structure are mispriced/how the bankruptcy might play out, which is what it sounds like you're trying to learn.

PM me if you have specific questions and I'll do my best.

Mar 9, 2011

i know someone who moved from equity research to a top distressed shop...just saying
it helps if you are covering an industry with distressed names though I'd imagine, talking about your report on WR Grace is better than most bankers could do unless they are at a restructuring advisory shop

Mar 9, 2011

I'm making it up as I go along.