Special Sits (Oaktree SSG, GSO, KKR Special Sits, TPG Sixth Street Partner)
Anyone have any thoughts about the differences between the above mentioned groups (outside of AUM)? Obviously GSO has underperformed lately, but I haven't heard very much about Oaktree SSG nor KKR special sits. Also any tips on evaluating the strength of distressed players/groups when recruiting?
I think your question is too general to be able to answer MF vs dedicated hedge fund. KKR Special Sits is very different than Anchorage. The question is what are you more interested in? Do you want to focus on public, event driven, long/short opportunities across the capital structure or do you want to structure private financing solutions for distressed middle market type companies? Or maybe you want to do both? I personally find the former more interesting but thats just me. For any of these questions you have to specify exactly which groups you're referring to (the ones you listed have different strategies).
it varies. What you're looking for at a mega fund would be classified as "liquid opportunistic credit" in terms of a HF vehicle, drawdown or opportunities funds with ability to invest in public situations and traditional PE funds with mandate to cross into public. That's where they will be putting on all the major stress/distress public names. The only thing I would highlight is a firm like KKR a lot of times comes in as a par-money lender as that's their main credit focus, but doesn't mean they won't buy into loans getting cheaper. Buying $20mm of a loan at par and building another $50mm of MV position at 50c (i.e. now $120mm of face loans in a $4bn fund at weighted entry price of 58c) is common enough amongst truly opportunistic non-CLO capital; your last dollars in with always have the best return whether it's a HF exercising rights post-BK, putting in expensive DIP dollars or buying a non-bankruptcy security that trades off after earnings/dislocation/whatever.
It's a total misnomer to say that megafunds don't participate in public credit. Go look at any of the major 2019s or reorg alerts of major players in liquid structures, there's quite a few examples littered with megafunds having significant control stakes whether its TPG, Ares, Apollo (both through PE and HFs), GSO (whoever mentioned GSO and conflated shutting down their "HF" vehicle with "structured i.e. private placement investing" is totally full of shit) etc.
People act like "oh it's nothing they raised a $4bn fund that can invest across public private situations". That likely comes from people who work at a $1bn HF with a non-fee paying founder/partner class and 3 LPs who in moment's notice might pull their money. Stop pretending like you're in such a superior seat.
It’s also important to consider the strengths and weaknesses of your personality / work style. MF credit arms will behave more like banking/PE where you work in deal teams, iterative processes, and driving towards pushing out a collective work product. Personalities tend to be much more conformist, clean cut, vanilla professionals that are competent enough but nothing special.
Independent HFs have much less structure, although this is obviously a broad generalization. Much more likely that you will have people that are somewhat of misfits socially, weird, and have hard edges. These people are generally terrible managers, but MIGHT be good investors. But the whole point is to think differently from the crowd (or at least think u do) and come up with complex ideas (sometimes to the detriment of performance in favor of individual ego. good investments are often simple). You are likely to be given a Bloomberg, some subscriptions/research services and left alone to do your work and figure shit out. This can be isolating or liberating, depending on your personality.
Neither types of culture are superior - there are money makers and blow ups in both types, and exceptions to these archetypes. But getting stuck in a culture that doesn’t fit your style will most likely make you miserable and unsuccessful and vice versa.
KKR Special Sits has been a failed experiment.
This article outlines some of their fundraising issues and turnover https://www.bloomberg.com/news/articles/2020-04-20/kkr-resurrects-credi…
https://ir.kkr.com/news-releases/news-release-details/kkr-completes-4-b…
The rebranded version referenced in that article closed on a $4bn fundraise. If anything this highlights the stability of these sorts of platforms - change the name, swap out a couple senior people, and youre good to go. At a smaller shop, this would probably have meant full liquidation and everybody fired.
It’s also a different mandate now. But it’s astonishing how they can light money on fire for a decade then raise $4B at the snap of their fingers.