List of Opportunistic Value Funds
Certain hedge funds are truly opportunistic, asset-class and geography agnostic, concentrated, and usually value-oriented. These are truly flexible funds able to invest in public equities (actively or passively), distressed debt, structured credit, and private assets (RE, venture, etc.). They tend to be absolute-return focused, and will often hold large cash balances in order to be opportunistic. Does anyone have a comprehensive list of these funds?
Baupost and the funds founded by some of its alumni are probably the best-known examples of this. I would include funds such as Third Point and Elliott (and certain funds that have spun-off from them) in this category as well. Maybe Appaloosa should also fall under this category. Berkshire Hathaway (obviously not a hedge fund) invests similarly, with less emphasis on distressed and structured credit.
Are there several other funds like these? I'm trying to understand these types of funds better and appreciate the help.
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I guess something like BX Tac Opps would fit in here as well, although they are not exactly a hedge fund and they also have a mandate to not compete with the rest of BX (which effectively makes them less flexible).
Any thoughts on this from the rest of the community?
Tac Opps is pretty shit. As described by several members of that team, it's where they look at the opps that the other investment teams at BX pass on.
but the universe of securities that doesn't fit under a traditional buyout or credit is still pretty wide, no? i know a few guys that have raved about how sharp they are and how interesting their work is
I would say a majority of event driven/distressed funds with cap structure agnostic mandates would fit into this. Silver Point and many $1-3B funds like Mudrick, Birch Grove, Lion Point etc. come to mind (maybe less so on the private asset side in the case of those three, though they're certainly active in spec sit. private lending.) As an aside, orient/bias towards credit or equity would vary, but I'd assume many would be more credit-oriented dependent upon the environment. (take for instance Elliot, historically publicly known for sov/corp distressed becoming known as more of an equity activist in recent years given relative lack of opps in distressed recently)
Thanks for the reply. How would you say the funds you listed differ from other distressed/special sit funds?
Do they generally have longer investing horizons? Will they invest in a more concentrated fashion and hold larger cash balances to find the 'perfect' idea (Baupost, for instance, has held up to 50% of its portfolio in cash, and I think had ~20% of its portfolio in Enron and Lehman bonds at various points, I believe)?
That just sounds like special sits, is there a difference?
Not exactly. Berkshire Hathaway is not really considered a special sit investor. Appaloosa is not really considered one either.
Many special sit funds I know of do not operate with the broad flexibility that I described in my opening post, nor is their default position to hold cash to wait for a compelling idea to present itself. Berkshire, for instance, is sitting on 100Bn+ of cash waiting for the perfect opportunity.
To add to this, does anyone know of hedge funds that invest heavily in private markets? This can span the spectrum of opportunistic (rescue/DIP) loans, esoteric financial assets (credit card receivables, NPLs), real estate, and corporate private equity (minority or control, as needed).
Various special sit groups at the megafunds invest in this manner, but I was wondering how many HFs do. Thanks.
What you are describing is literally just credit oriented distressed focused HFs
Interested in this -- do these funds recruit out of banking or is it post PE/MBA? If so from banking, what banks come up most often?
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