Interview with High Yield Harry

The most important thing is that you go to a school that has a presence on the Street and a formalized funnel where ‘xyz’ amount of students are regularly getting allocated Investment Banking or Wall Street seats. This doesn’t have to be an Ivy - there are plenty of football state schools that fit this bill

Your school’s ability to consistently send the top students to the Street is what is most critical. However, there is a “signaling” right? Presumably, if you went to a top school you should be pretty sharp. Not always the case, but the 50th percentile Wharton grad is probably a hell of a lot smarter than the 95th percentile Eastern Arkansas grad

Prestige isn’t very important IMO. Students reading this will realize this perspective in an investing seat ~5-8 years into their careers. The majority of PE or Private Credit professionals work at shops called “Blue Sea Capital” or something random. A lot of professionals at that age will look for funds where they can get a bigger slice of the carried interest or equity compensation pie

I just vaguely knew I liked “business” and eventually that led to pursuing leveraged finance as a great way to make more $$. I’ve viewed making $ as a way to increase optionality & freedom

Ya I haven’t been an analyst for a minute. I think my career worked out well though given my non-target background. I love the public markets, but also like situations with some hair on them, so the high yield credit market was a natural fit

In my experience it has NOT been okay to get technical questions wrong. Technicals are more important at a younger age and should be focused on heavily. However, if someone was to ask me technicals after a first-year associate level, I would be really confused and maybe walk out of the interview

Behaviorals and how to answer questions about transaction experience or investment recommendations holistically become far more important than depreciation or deferred revenue brain teasers

The lack of details about transaction experience (in more experienced candidates) is a big one. You should be including some basic details about what deals you’ve worked on. Low GPA and a lack of extracurricular involvement is something I would likely ding a younger candidate for

I have a lot of writing on this in my newsletter (HYH Newsletter). I’d say the key ones are around proofreading constantly, over-communicating, predicting demands, and writing everything down. The more you re-read, the higher the probability of catching errors - it’s okay to slow down sometimes to make sure you have a great work product. Over-communicate with “will do,” “sounds good,” “on it,” to confirm receipt and make your VP, or whomever, know you understood the assignment. It’s also good to vocalize what you’re currently working on. Predicting demands is big - especially when there’s a recurring task - you want to figure out how to add value and save people time

Crazy how early and fast buy-side and banking recruitment occurs now. I have a bunch of career resources that are primarily tailored for entry-level finance professionals and specifically if you’re looking to pursue a career in Credit (HYH Newsletter). Of course, a lot of IB professionals recently moved to Private Credit. I focus a lot of my materials on rounding out the soft skills and qualitative components needed to be successful early on in an investing career. For Private Equity dedicated resources, I’d ride with Peak Frameworks (PF)

It’s hard to narrow this down to one piece of advice, but I’d say “Don’t be content”. “Oh you completed xyz task and have it down at this level?” Sick, but you should be looking to improve and bring more to the table next time. The first 3 years are really foundational. However, a lot of it is process driven. So you should be working to regularly improve how you process a task instead of being content with B/B+ work. You don’t need A+s, but you should find out how to get to A-/A work asap

Anyone who said they didn’t have help is full of shit

Early on, I used a cumulation of taking the best points from upperclassmen, alumni, connections I made, professors, peers, etc. and used these notes to learn how to improve and develop as an entry-level finance guy, as well how to launch from a stepping stone to the next opportunity

Biggest achievement is probably never getting fired. It’s easy to forget how often this happens in the industry, and I’m just grateful I’ve always had money coming in the door. The audience I’m talking to right now should focus on being frugal as an analyst, build up an emergency fund/a nice cushion, and then feel more comfortable after that. Most ppl will probs deal with at least one layoff that lasts a while (like 6-12 months) within their first 10-15 years

Biggest failure is sometimes I treat churning work product like a race. Moving too fast, and having work filled with errors instead of spending just a little more time to finetune and make sure it’s not as error-filled. I’m still someone who rushes too much sometimes, it’s not the best habit. You want to be known for quality, thoughtful work

I was bored during covid. Even after work, I had a lot of free time and figured it would be funny to make a meme page. I had really enjoyed the original finmeme pages and I was noticing that era starting to end. So, I figured I’d give it a whirl and I’m really excited with how far it’s come since then

In terms of going full-time, I like how much I make, but I don’t make enough to be full-time. I also really like my job at the moment and think there’s a lot more to learn and go through. Also, I’m excited for the next 2-3 years in the credit markets

With HYH, I’ll be quick - I expect more of the same on the meme front. On the newsletter front, I’m going to continue expanding with more helpful resources for buy-side investing professionals; while maintaining a focus on Credit. I was brief there because I actually have an exciting announcement

I recently acquired the Wall Street Confessions brand (WSC). The brand originated back in 2018 as a way to anonymously submit confessions about how grueling and troubling the finance industry can be. The brand is mainly an Instagram-focused offering, so I hope y’all can follow there. I’m excited to get to work on reinvigorating it and adding to my regular flow of finance content. I might need an intern at some point, but I’m looking forward to taking this on

Definitely getting too much love, but there is a window right now of nice returns for early entrants/those with scale/those who did nice deals. But as competition increases, credit documentation and loan pricing will continue its 2010s trend of weakening. Additionally, PC is a little too concentrated on loan positions, while banks syndicate their deals and public credit funds/CLOs are significantly more diversified

Hard to name names. Plenty of simping for deal flow though. PC is fundamentally a risk that banks don’t want on their balance sheets. There are true credit investors in there of course, people who have invested through cycles, but there is a broader fear a lot of newer private credit professionals. They haven’t been through a cycle and were “deal flow bankers;” opposed to credit investors, who scrutinize deals aggressively

I like to call “amend and extend” something else - “amend and pretend” - aka amending with some slight changes to the credit docs and extending the maturity while pretending everything is going to be fine

There are less defaults right now for two reasons: 1) rate hike cycles take a while to have their full effect, there is always a lag. 3 years of higher rates is much more pronounced than 2 years of higher rates. I’d say private marks, longer hold periods, and previously raised funds are key A&E drivers - but without new fundraising, this could make A&E more challenging. In PC, we always modeled out our loan getting paid back at par after 4-7 years. This aligns with returning $ to LPs, but we don’t want to be stuck with debt for 10 years 

2). While more public markets specific, liability management transactions are going to delay defaults. Sponsors welcome these transactions - which essentially allow 51%-76% of the lender group to provide new super senior priority capital to the Company in exchange for favorable terms and more seniority. This often comes at the expense of anyone subordinated, whether it’s an equity holder or a non-participating lender. Participating lenders can get some pretty favorable economics for backstopping a new loan. Sponsors love this because it keeps the Company alive for longer and is just another new creative way to get lenders to go knives out on each other

Hard to say - if you produce poor returns, you’ll have a poor time fundraising. So, it will mainly be firm-specific. Not all PC deals are a wash in ‘21, but the vintage problem will be more pronounced in PE, where they transacted at cycle-high EV/EBITDA multiples and bought at overinflated EBITDA numbers. A lot of ‘21 companies are already zombies in a higher interest rate environment and desperately need rates to come down/earnings to steadily improve

I think a lot of opportunistic PC deals getting done right now might have outsized returns that could make up for a poor deal or two. But the problem with PC is your fund could have like 12-15 deals. Meanwhile, the average CLO for the BSL guys has like 200 deals in a $500mm CLO

Love this quote! It’s so true - when you’re worried about downside risk, sometimes you think “ew this bond trades at 50 cents” and forget that “oh, well it’s actually okay to buy this bond at 50 cents!” I feel like I’ve missed 20-30 point moves because I was too scared to take a little more risk and make a trade

There are plenty of HY bonds that go to zero eventually though and also a restructuring or bankruptcy process is exhausting and comes with a lot of headaches, so you don’t want to get timesucked in a situation you don’t have a high conviction on. So, I agree with the quote 90% of the time cause some shit just frankly goes to zero. Also worth noting that some credit platforms, or particular buckets within AUM, are ratings-constrained. So for them, there are in fact bad prices - this quote more so holds up if you have a broad and flexible mandate