AMA: Analyst at $5B+ Credit HF Taking Your Questions

[Mezz1]

Beginning first year as an investment analyst at a $5B debt fund. Invest in global credit situations across the cap structure (senior loans, HY bonds, mezz and equity co-invests) in Europe and the US.

Background:

Based in London, spent summers at a BB in M&A and at a multi-strat HF in Europe. 'Target undergrad' with BusAdmin degree in Europe.

Fire away.

 

[Canary Wharfian1]

Thanks for doing this!

- what's your take on this whole target-nontarget debate (as far as europe is concerned)?
- how different is the hedge fund culture compared to what you experienced at the bulge bracket? I get you started at this fund straight out of ugrad?

 

[LegendaryRonBurgundy1]

Weirdest interview question?

 

[hitchensism1]

Beginning first year as an investment analyst at a $5B debt fund. Invest in global credit situations across the cap structure (senior loans, HY bonds, mezz and equity co-invests) in Europe and the US.

Background:

Based in London, spent summers at a BB in M&A and at a multi-strat HF in Europe. 'Target undergrad' with BusAdmin degree in Europe.

Fire away.

- Could you elaborate a little more on your background? Specifically how you got a) your first multi-strat HF gig, and b) how that led into becoming a FT Analyst

 

[TheKnownUnknown1]

- What are your best tips for securing a summer internship in the BB M&A divisions, i.e. which techniques that most people don't know of/don't use did you use to give you the edge? (Be it in the preparing for psychometric tests or interview stages, or even gaining industry awareness.)

 

[T771]

How about your long term plans/exit opps seeing you are already on the buy-side? Thanks.

 

[Mr. Exclusive1]

- What's so great about distressed debt/debt in general that appeals to you?
- Why did you decide against M&A?
- How do you see the debt market across Europe developing over the coming years broadly speaking?

Thanks.

 

[Mezz1]

Thanks for doing this!

- what's your take on this whole target-nontarget debate (as far as europe is concerned)?
- how different is the hedge fund culture compared to what you experienced at the bulge bracket? I get you started at this fund straight out of ugrad?

It's important for your first job out of school but becomes very secondary as you go up the ladder. But it's a reality when recruiting for the sellside, it's less risky for banks to recruit from top schools. However, this does not mean non-target kids can't get in, it'll just be a bit harder due to the lack of bank presence / alumni at these schools. Personally, I'm not fussed about the school as long as I like the candidate and he / she gets the job done / saves me time.

I did start directly out of school. But keeping it simple, it depends on the size of the fund / how they are structured. If you join a large shop like BX / Man, it'll be much more like working at a bank in terms of hierarchy / nature of work than if you started at a smaller place where you'll be given much more responsibility and your seniors will rely much more on you.

As for the difference in my particular case, yes the senior analyst I work with would quickly look over the work I produced before presenting it when I started, but your peers are genuinely interested in what you have to say about any particular situation you may look at. Unlike in banking.

 

[Mezz1]

Weirdest interview question?

Haven't had too many weird ones... First one that comes to mind is if I could have dinner with 5 people (dead or alive), who would these be. But let me have a think.

 

[Mezz1]

- Could you elaborate a little more on your background? Specifically how you got a) your first multi-strat HF gig, and b) how that led into becoming a FT Analyst

Sure. During my internship at the BB I networked extensively and was offered a part-time internship in the London office during classes which I declined (couldn't manage the work with school work). Through the process I got referred to 3-4 HFs in London by my boss looking for interns which offered more flexible working times so I started around March of the following year at one of the HFs ($20bn+) working as an assistant for one of the PMs. That particular fund wasn't hiring for FT but the skills I learned were very transferable and the rest is history, I joined a pure debt HF.

 

[Mezz1]

- What are your best tips for securing a summer internship in the BB M&A divisions, i.e. which techniques that most people don't know of/don't use did you use to give you the edge? (Be it in the preparing for psychometric tests or interview stages, or even gaining industry awareness.)

My BB internship was during my first summer of school and I had interned there before (in another division) so I had no psychometric tests to prepare for but all you can do is just do them over and over again, they're all the same (be it Kenexa or SHL, I got owned by the Citi test back in the day though lol).

But all I can say is have a solid resume (which is to the point and is INTERESTING, please guys, something as simple as that can make a huge difference with respect to the other IB drones applying) and know your shit cold. When I say this, I mean actually understand it, don't just memorize. This is very easy to see through when you're interviewing. Having the business side covered just leaves the acting as a normal person the only problem (which I hope it isn't as we'll be working together at least 12-14hrs/day). You know why so many people get rejected from BBs? Because they don't do this. They're nervous, they tremble, they can't think straight when interviewing with the MD, etc etc. For those of you who get dinged on the technical qs you have no shame.

 

[Mezz1]

How about your long term plans/exit opps seeing you are already on the buy-side? Thanks.

I'm very early in the learning process at the moment so for the time being just to buckle down and learn. Exit opps? Either another fund a few years down the line (probably smaller) who can offer me more responsibility or start my own if I do well. I have no real plans as of now. The debt space has been very exciting these past few years and still has some space to go with the lack of lending from the banks in Europe to middle-market firms / distressed situations across the Southern Europe cone so I think I might be in the sweet spot at the right time.

 

[Mezz1]

- What's so great about distressed debt/debt in general that appeals to you?
- Why did you decide against M&A?
- How do you see the debt market across Europe developing over the coming years broadly speaking?

Thanks.

The debt space offers a much wider range of investment opportunities than equities. When you look at a company's cap structure it'll usually be a mix of senior / junior debt and equity, with the debt side being a mixture of several tranches.

At my fund, for example, we invest across the whole cap structure and we deal with both primary and secondary situations i.e. as a primary: PE fund is planning on LBOing Company A and is looking at x financing structure with x% of senior debt (TLA / TLB) and x% in junior debt with a PIK component. We could either provide the whole package or take a position in the junior piece. As a secondary its more difficult to give a standard scenario because every situation is different but keeping it simple: debt funds buy up pieces on the secondary market (bonds / loans) from other lenders who are eager to sell at a 'fair' discount to par. Take a look at the 500m piece Apollo / Blackstone bought from FCC this week, it's been a very heated topic amongst HFs this summer.

I didn't go for M&A because I had no interest in it after my summer there. I knew I wanted to be an investor and I had zero interest in banking for the long-term, so I left. But IB is a great school and places you on a great route to going pretty much anywhere after you spend a couple of years there.

On the primary side we see plenty of volume due to the lack of bank lending in Europe, but the secondary market is quite tight with many funds finding it hard to find high yielding situations. Largest volume usually comes from the South of Europe (Spain, Portugal, Greece (love shipping) and Italy).