Distressed Debt

Does anyone here work in distressed debt? How does one get into a career in distressed debt investing? I can think of two ways: 1) work in a restructuring group for an investment bank 2) be a bankruptcy lawyer and switch over to the investing side. Anything else? Also, are there any other types of investment firms that invest in distressed debt other than hedge funds? Any input would be greatly appreciated.

Private Equity firms invest in DD.

You just go work for a bank or a hedge fund that does distressed debt investing and you start doing it. Distressed debt investing has this problem that your universe is dictated to you by economics rather than what you are interested in. So when I was doing risk management for a distressed group, it seemed that everything they owned was related to airlines, automotive, or telecom. Ultimately, the number of securities you can buy (you can’t short this stuff) is pretty small and everyone is buying the same stuff. If you try to be interesting, you end up spending lots of time looking for stuff that turns out to be illiquid and you can’t make a significant investment in it. In the end, everyone ends up owning pretty similar portfolios and it’s just matter of what happens to the distressed industry and the economy (so you can have great years like 2003 when any moron in the world would make >30% in distressed securities). Meanwhile, you spend your life dealing with lawyers, lousy business managers, crappy products, and dysfunctional everything. PE stuff is somewhat more interesting and I know a guy who does turn arounds (which is a little different). When it works he finds it is deeply satisfying. On the other hand, his last one didn’t work and he is munching Paxil, Xanax, and Rolaids like they were M&M’s.

US taxpayers may invest in DD

Interviewed with the rbs distressed prop trading desk earlier this year… Very bright guys and a very interesting job

Cool, thanks for the responses.

Natural Light? Do you like natties? Is this Dajs’ new name?

No, it’s a beer. My favorite beer.