What Are The Largest Special Situations Funds?

Overview

• Special situations funds are also known as event-driven or distressed asset hedge funds.
• They capitalize on pricing discrepancies affected by corporate-driven actions such as mergers, liquidations, and earnings reports.

Largest Special Situations Funds

Apollo Global Management

• Assets Under Management (AUM): $600 billion
• Strategies:
  • Distressed debt securities
  • Real estate
  • Private equity
  • Mergers and restructurings
• Founder: Leon Black

Oaktree Capital Management

• AUM: $160 billion
• Founders: Howard Marks and Bruce Karsh
• Investment Strategies:
  • Corporate and distressed debt
  • Real estate
  • Control investing (private equity or private placements)
  • Convertible securities
  • Tender offers, mergers, and activist pursuits

Cerberus Capital Management

• AUM: $60 billion
• Founder: Stephen Feinberg
• Strategies:
  • Acquisitions and mergers
  • Rights offerings
  • Real estate
  • Distressed debt opportunities

Elliott Management Corporation

• AUM: $55 billion
• Founder: Paul Singer
• Focus:
  • Activist hedge fund strategy
  • Board representation
  • Distressed debt
  • Mergers, acquisitions, and bankruptcy restructuring

Fortress Investment Group

• AUM: $54 billion
• Founders: Wesley Edens, Randall Nardone, and Rob Kauffman
• Investments:
  • Real estate
  • Mezzanine credit lending
  • Private equity
  • Distressed securities
  • Restructuring

Davidson Kempner Capital Management

• AUM: $36 billion
• Founders: Marvin Davidson and Thomas Kempner
• Specializes in:
  • Arbitrage pricing discrepancies
  • Distressed securities turnarounds
  • Tender offers, spin-offs, spin-outs, and carve-out investing

Baupost Group

• AUM: $30 billion
• Founder: Seth Klarman
• Strategy:
  • Value investing
  • Distressed debt and securities
  • Real estate
  • Restructurings and undervalued securities
  • Selected private equity plays

York Capital Management

• AUM: $20 billion
• Founder: Jamie Dinan
• Investments in:
  • Mergers and acquisitions
  • Liquidations
  • Distressed debt
  • Currency arbitrage
  • Restructuring

Silver Point Capital

• AUM: $15 billion
• Founders: Edward Mule and Robert O'Shea
• Investment Focus:
  • Credit lending
  • Distressed debt
  • Mergers and acquisitions
  • Restructuring

Avenue Capital Group

• AUM: $12 billion
• Co-founders: Sonia Gardner and Marc Lasry
• Capital Allocation in:
  • Distressed debt
  • Undervalued securities
  • Mergers and acquisitions
  • Currency and triangular arbitrage
  • Private equity investments

Characteristics

• These funds prospect, identify, and invest in company-changing corporate events.
• They aim for capital appreciation based on a managed risk/reward profile.
• Investments may be short-term or extend to longer horizons to achieve controlling ownership.