Why is this man laughing?
Posted: December 11th, 2008 | Author: Wayne Weddington | Filed under: Opinion | Tags: distressed, distressed debt, hedge funds, market volatility |
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I share the floor of my office building with two other hedge funds. It is an open office lay-out, partners in glass offices along the walls and the executors (traders and assistants) in the middle. We are distinct companies but the layout makes us seem a seamless one organization.
We see each other every day but other than the traders and assistants of my own group I could not even hazard a guess as to most of the names of the other 30-odd people that work within my view. All very nice people. No matter…. a smile, a grunt or an empathetic nod to current market conditions is sufficient to signal camaraderie.
Interestingly we all have a different reaction to the markets on any particular day. Each of the three fund groups here concentrates on a particular aspect of the market. I run a Long/Short equity strategy and a Global Opportunity strategy (both doing well, detailed in a previous post as a Tale of Two Cities).
The other two groups are each fixed income shops focused on distressed commercial debt and distressed residential mortgage portfolios. One buys up the distressed debt of the very failed institutions that have made the headlines, and the other buys residential mortgages. They have raised a lot of money for their strategies in a relatively short period of time.
On market days when most would be crying, those arbiters of distressed securities are audibly giddy. They sure do laugh a lot. Lots of smiles. One cannot help but conclude that distressed debt funds are doing OK these days.
-Wayne Weddington