Talk:Distressed securities
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"Known Distressed Funds" seems inappropriate, unless someone is prepared to keep it up-to-date. There also appears to be no cited basis for these. I'll remove this in a few days unless anyone has a different POV. Martin 12:45, 25 January 2007 (UTC)
Hello Martin, I have collected a list of more than 250 distressed funds and they are separated by funds which are acting in the US, those which are acting in Europe and those which have offices in US and Europe. To my knowledge only very few funds operate in Asia. I can provide the exact numbers if this is of interest. However I am almost sure that most of the funds would not be willing to show up on a list here... A lot of hedge funds don't have a website and try to stay away from the media as far as possible. My assumption is that they view the downside of publicity larger than the limited upside. At least this is how I would view it. Even when the existence of this funds and their distressed strategies is public information it would be inappropriate to post their names here without prior written consent.
Günter
[edit] Yields
Can anyone provide a reference to the statement that distressed credit instruments provide higher yields than their riskyness warrants? Zain Ebrahim 11:29, 27 June 2007 (UTC)
[edit] Some citations are needed
I cleaned up a few things here and there; mostly cosmetics. I do, however, see at least 2 things that need to be cited and/or rewarded. Perhaps, most troubling is the following sentence:
Historically, distressed securities have traded at deep discounts to a rational assessment of their risk-adjusted value <...> This has led to above average returns (adjusted for risk) from investors in this asset class.
One can certainly make an argument that much of stressed/distressed/defaulted debt trades at a discount to its "intrinsic value" and many active players in the market have produced notorious risk-adjusted returns. However, when one looks at some broad market proxies (Altman-Salomon index is one; I think Merrill Lynch have an index of their own too), the picture is not particularly rosy. Altman's numbers (I linked to the report in the article) imply an abysmally low Sharpe ratio. And what are these "average returns" anyway that the author claims distressed securities beat?
Secondly, is there any data available on the capital raised in this space in recent years? I certainly catch a lot of hearsay, but I have yet to see some hard numbers. Index capitalization doesn't cut it - since we just entered what appears to be a vicious credit cycle, spreads haven't yet widened tremendously and corporate credit hasn't started defaulting in massive amounts like in 2002. The actual "market" now is actually smaller than it was in, say, '98... Agorboun 03:50, 5 September 2007 (UTC)
