Special Situations/Distressed Securities

[SeanC]

If someone wanted to be a global macro analyst specailizing in distressed securities (company restructorings on the equity side/disstressed debt on FI side). What is the best approach they can take? is it similar to deep value investing? what sort of skills would they need and what would their typical day be like? After some consideration I figure that this is one area which really interests me but i havent found too much information on it. are there any books, or analyst bios i could look into?


Does any one on this board have any experience in this arena?

I apologize in advance for my horrible punctuation/grammar and spelling.

 

[JoeyDVivre]

I have never met anyone who claims to be both a "global macro analyst" and "specialized on distressed securities". Those just don't fit together. A global macro analyst is about large scale movements of equity, interest rate, and currency markets. They would usually trade things like yen, FTSE, JGB, etc.. Distressed securities are much more micro than macro. Most distressed securities analysis is about analyzing the particular security within the context of the issuers chances of going broke or its recovery possibility.

I think you choose one or the other. In fact, I don't even think they belong in the same hedge fund - a case I've made before - to say nothing of the same person.

 

[lig]

SeanC,

agree with what jdv said.

you may want to take a look at the mutual series funds. they have been investing with a deep value/distressed/risk arb style for many years. and, they have had good results throughout a series a different managers which suggests their process works.

the results haven't been as good as the old Michael Price days, but they continue to differentiate themselves with good results.

there are lots of deep value managers but mutual series also brings a global view to the table - not so much a macro view - but they do look internationally. they have several funds which are all similar but have slightly different perspectives on domestic vs international etc.

they also have a relatively new "recovery" fund which focuses more on the distressed area.

 

[Big Nodge]

My feeling is that a lot of special situations guys are ex-bankers, like obviously someone from a restructuring background would be a great fit. Also, legal knowledge is important, i.e. familiarity with bankruptcy proceedings, workouts, the waterfall, etc.

 

[stylemog]

yeah, and to add to what big nodge said, global macro guys are usually traders from rates or fx desks.

 

[SeanC]

stylemog Wrote:
-------------------------------------------------------
> yeah, and to add to what big nodge said, global
> macro guys are usually traders from rates or fx
> desks.


ok, i had a feeling i was wrong on that one.

I guess what i realy wanted to say was special situation analysts who look at multiple markets without say specializing in domestic large caps. I just see so many good investments in multiple markets and capitalizations it would be annoying to be pigeonholed to just a handful of the same type of issuers. Though that level of specialization does mean that one has the ability to really know a paticular sector inside and out.