The past few years have been pretty wild for anyone working in credit, the business of selling and trading corporate debt. First, you had the pandemic, which changed working patterns across Wall Street. Then you had a surge in deal activity that had everyone working overtime to meet demand. Meanwhile, private credit has been booming and is now competing with banks' cash cow businesses of selling bonds and leveraged loans. And finally, everyone is wondering how long the credit space can withstand higher interest rates, and how frothy the underlying deals actually all. High Yield Harry, an anonymous social media account, has been chronicling it all -- making memes out of junk bond offerings, and cracking jokes about conversations with investment committees. In this episode, he talks about his experience working in both private and public credit, what it's like to run an anonymous FinTwit account, and the outlook for bonuses this year. High Yield Harry's voice is concealed in this episode to preserve anonymity. This transcript has been lightly edited for clarity.
Key insight from the pod:
Who is High Yield Harry and what does he do?— 3:21
Why did he start an anonymous meme account? — 4:21
The difference between working in private and public credit — 8:43
What attracts investors to private credit? — 13:47
How a private credit deal actually comes into being — 15:22
Why investment banks getting into private credit — 20:29
Why analysts are moving to private credit — 22:23
Bank bonuses and pay transparency — 24:23
The jump in post-pandemic deal flow — 27:32
Work-life balance on Wall Street and return to office — 31:26
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Tracy Alloway (00:09):
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.
Joe Weisenthal (00:14):
And I'm Joe Weisenthal.
Tracy (00:15):
Joe, we're about to do something we've never done before.
Joe (00:18):
I'm very excited about this. This is something that I've always sort of wanted to do, maybe even before we had a podcast. Like, even since I was a little kid, watching and seeing some like new shows. Because we're going to talk to someone disguised, right?
Tracy (00:34):
Yes, we are going to talk to an anonymous source, an anonymous person. Someone who’s anonymous online but will also be doubly anonymous on this podcast and we're going to be disguising their voice.
Joe (00:47):
Yeah, I'm really excited. I've always wanted to do that. Because, you know, those old like investigative shows…
Tracy (00:52):
Where they have the shadows, you see the silhouette?
Joe (00:55):
Yeah, they sound like a robot and stuff like that. And that's so cool. And, you know, there's no reason we can't do that.
Tracy (01:03):
Okay. Yes, that is exactly what we're going to do. I'll just go ahead and say it. We're going to be speaking with @HighYieldHarry, who runs a couple different accounts on social media. He's on Twitter and also on Instagram. He also has his own newsletter where he's basically chronicling some of the craziness that happens on Wall Street in various ways, but also in the credit markets specifically.
And listeners know that private credit and its differences [from] traditional public credit markets. So publicly issued junk bonds or leveraged loans have been a topic of interest for us. But in general, credit markets are always interesting things. And we have been at a sort of interesting juncture in them where last year turned out to be a fantastic year for credit if you got in at the right time. And that is despite lots of people expecting that this would be the area where you would see the impact of higher interest rates. This was the frothiest area of the market in some respects, certainly in leveraged loans. And that would be the place where you would see trouble from the rate hikes. And yet, early 2024, haven't really seen that.
Joe (02:04):
So, we talk obviously as you said, a lot about credit. We talk about a lot in the macro sense. Where is the investor demand coming from? What is the effect or not effect of higher interest rates? What is the effect of Dodd-Frank and shifting lending capacity from banks to other non-bank institutions, etc.? And all that's great and all that's important. But you can't really understand it just from the sort of numbers without understanding someone who would just talk about the world of actually making the loans and making the deals.
Tracy (02:35):
Right, the incentives that go into doing this. And like, who are the players in this market? So without further ado, I am very pleased to say, we have High Yield Harry with us. As mentioned, this isn't his real voice. I think it will be obvious when the episode comes out. But Harry, thank you so much for doing this.
High Yield Harry (02:54):
Yeah, hi Tracy. Hi Joe. Thanks for having me. You know, glad to be the exception. And I'm interested in hearing how my voice is going to sound
Joe (03:01):
Me too!
Harry (03:02):
Might be sounding like the Riddler, holding Gotham for ransom. But it'll be interesting to hear how it works out.
Tracy (03:09):
So first question, I want to give you this space to explain who you are without giving too much away and doxing yourself. But who are you and what do you do?
Harry (03:21):
Yeah, so I'm a junior professional in the world of public credit. I did the typical stint from the sell-side to credit. And I've experienced wearing different hats in terms of public credit and private credit. Right now, my focus is on public credit. You know, I like the opportunity set there. And I'm more of a market-based individual as opposed to a deal team guy. So that kind of drew me to public credit. But I've dipped my toes in both and have done plenty of investment committee memos for both types of offerings.
Joe (03:57):
I'm really excited about this. I want to get into the world of credit and what you've seen from the inside and all of that. But now before we do, talk about your public persona, the High Yield Harry persona on Twitter and Instagram. What prompted you to adopt this persona? And why are you one of the only good ones [meme accounts]?
Harry (04:21):
You're too kind. I was sitting around in mid-2020. Covid was going on, I was in my parents' basement. And you know, there was a lot going on in the credit markets back in like March and April. But after that, it really settled down.
I had a lot of time on my hands after some more stressful 2 a.m. nights and decided I really wanted to make a finance meme account. Finance memes, in particular on Instagram, really originated back in like 2017. And I would say that was really the golden age of finance memes. And I was really, as a younger guy, enjoying all the memes coming out from all those accounts.
And I noticed some of those guys were starting to post a lot less. So I figured I should try my hand at this. My favorite show is Succession, I love that show. And I figured, you know, I should probably do some memes and incorporate Succession into it and look, that got a lot of popularity early on. And as things developed in the credit markets, especially with all the M&A activity and craziness going on in 2021 and early ’22, I think people took interest in the account.
Tracy (05:41):
These are popular meme formats, but you’re kind of using them to say very specific things about the credit markets at times. So what is it about the meme format that lends itself to sort of credit analysis or credit commentary?
Harry (05:57):
Yeah, that's a good question. I mean, it's funny how niche you can really get. You can get very complex and talk about liquidation preferences. Or PIK, payment in kind, and all these different nuances in the form of a viral meme. You know, I'm not really sure what drives that psychology. I just know people love it and react to it in a very unique and niche way. And it's just really hard to like capture that in a bottle, I suppose. But as long as people are enjoying it and enjoying all these goofy memes and videos, then I'm happy to oblige and keep the party going.
Joe (06:38):
You know, I've heard people say things like you know when you are becoming fluent in a foreign language when you have a dream in that language. And I think there's an equivalent where it’s like you know you actually understand an industry well when you get the jokes and the memes. The more niche the better. Because there are meme pages for literally every industry. There are trucking memes and then truck driver meme pages, and then freight memes and freight meme pages, broker meme pages, etc. And I get some of it, I look at them, because we've done a lot of freight and I get half the joke. So I still have more work to do.
Tracy (07:16):
That’s right. When you use the distracted boyfriend meme, it's like a proficiency certificate in your area.
Joe (07:20):
It really is. It’s like can you make a meme for an industry that the industry participants themselves find funny? And most people can't do it because they don't know enough. But that is, I do think, like sort of the test of industry domain expertise. Can you meme? Can you get the memes, and can you make the memes that the other people find funny?
Harry (07:41):
Yeah, absolutely Joe. And I think as time has gone along, it's taken me a very short amount of time to make some of these memes. And, you know, I wish I had a more useful skill, like a skill of more economic value. But I watch a lot of TV. I watch a lot of good TV shows, and I kind of have etched in my brain use some of the great quotes or some of the great scenes from them. And all of a sudden you might get a No Country for Old Men or Sicario meme associated with finance. And that's the type of stuff that people love out of nowhere. And you tie that to something niche and it'll pop off.
Tracy (08:23):
I definitely have more questions on the social media side of things, but why don't we talk credit for a bit? You know, I'm sure you've been listening to some of the episodes that we've done where we're digging into private credit. But how would you characterize the difference between working in private credit versus working on the public side?
Joe (08:41):
Good question.
Harry (08:43):
Yeah, so there are pros and cons in each. I think with private credit, I think there's higher compensation for the individuals in there, so that's one thing. But I think with private credit, you can structure things in a lot of different ways and the opportunity set is very large.
You can look at something from a lower middle market lens, middle market lens, or you can even share in the broadly syndicated loan market. You know, I think with private credit, one thing in particular is you can get a lot more in the weeds. You can get a lot more comprehensive data room and really get in front of the management teams, really make sure they're answering the questions you need.
And I think the relationship with sponsors is a lot more important in the private credit world. Where, you know, in private credit, a lot of our deal flow comes from sponsor relationships, may come from a bank, but it also may come from a sponsor in terms of ‘we want you as the lender that we're going to work with,’ or ‘here’s 10 lenders. We're going to pick one, or maybe we'll pick four, and you guys need to get a term sheet in our hands as soon as possible.’
I think one of the cons with private credit though is, you know, from a fund standpoint, you're a little more concentrated on your bets. And then there's illiquidity as well. So, you know, when you really make an investment, I think you need a lot higher conviction given that it's not necessarily something you can trade out of.
So flipping over to public credit, from a liquidity standpoint, you may have 100 lenders within a broadly syndicated loan. And if it's a billion-dollar loan, you can get decent liquidity there. Even if it's a B-minus credit. So I think having that liquidity is a big positive for public credit because, with private credit, I think it's a lot harder to change things or have a loan change hands as things go south.
But, you know, the con with public credit in contrast to what I explained with diligence and the data room and getting in front of management and what have you, is, you know, you get on a lot of these lender calls as a public credit guy, and management will frankly just toss your question to the side, or say ‘we'll follow up with you offline about that.’ Or, you know, say, ‘we're not going to disclose that for competitive reasons.’
And some of these questions are things you need to know as an underwriting investor. And it's unfortunate it doesn't get answered, but that's kind of how it's structured. And you'll get a data room in public credit too that's a lot more thin relative to the private credit.
And then the last component too is, you know, documentation, where I think [in] public credit, we've seen this massive wave of cov-lite loans, you know, no maintenance covenants and looser docs in terms of what a sponsor can and cannot do. But I think in private credit, you can get some stronger protection and more of a heads-up as things go south. I think as the private credit loans get bigger, there's looser documentation. But for a general middle market or lower loan, I think you're getting stronger documentation.
Joe (12:27):
Can I ask a definitional question? Is a data room literally a room where you walk into a sealed room and look at information and can't take it out? Or is it virtual? What is a data room?
Harry (12:42):
Well, it's funny. You know, a data room gets a lot of jokes like that where people meme about it being a physical place, but it's actually more of a virtual place. You know, it could be on a website like Simtrack or it could be on something as simplistic as Dropbox, where a lot of data is inputted into an online database. So that can be financials, it can be a confidential information memorandum, a SIM, you know, a lender presentation, legal documents, KPIs, and just a lot of various information that helps an investor assess an investment opportunity.
Joe (13:21):
Can I ask your take, this is a question that comes up in every credit conversation, and I'm not always satisfied with the answers, but what is the attraction for investors to go into private credit? Because it’s like people say ‘oh, it's uncorrelated’ but it’s like, of course it’s uncorrelated, and like ‘oh, the returns are higher.’ But, you know, as you say, it's illiquid, no mark-to-market. How would you characterize the appetite from investors to lend via the private credit channel?
Harry (13:47):
Yeah, I think as SOFR and base rates have increased, you're getting a very attractive return. And then I think also from the covenant standpoint as well, you know, that provides a little more structure relative to leverage loans or high yield bonds potentially. And look, I think private equity has shifted a lot of deal flow to private credit.
So naturally, if you’re looking to invest in credit, you are looking to include some private credit into that mix as well. I'm still bullish on private credit, you know, I think there are a lot of smart and sophisticated investors in the space. But I think there’s also a lot of deals that get done on a relationship basis. But ultimately, you get pretty decent double-digit returns, and you have a first-lien position as opposed to an equity position. So, on [an] LTV-basis, I think you're fine with a lot of these names.
Tracy (14:52):
Talk to us more about how a private credit deal actually comes into being versus, say, a syndicated loan or something like that. Because I think the actual process by which an issuer chooses to go the public or the private route is still something I'm kind of wrapping my head around. What is, I guess, the catalyst for going one way or another? Who's calling the shots or who is influential in this process?
Harry (15:22):
Yeah. So, you know, I think a big thing I saw in private credit was people or sponsors would favor private credit in situations where banks or someone else is moving too slowly. Private equity would want a partner that moves fast and moves quickly with them. So I think that's an instance where private credit can come in and help provide a level of execution and certainty, which I think is massive.
I do think the public credit market makes a lot of sense for a lot of these bigger issuers. But in terms of, you know, on the smaller side, I think private credit comparably makes a lot of sense. So in terms of how these deals end up getting done, like I had mentioned earlier, a lot of this is from relationships.
It might be a banker who gives it out, but it’s predominantly going to be a sponsor who's seeking out term sheets from lenders. In terms of assessing this, it's all about myself as a junior person and then other people on the totem pole from VP to director to MD, assessing the data room. Getting in front of the sponsor to make sure we're getting what we need answered before we can take this to an investment committee, confirming internally whether senior individuals in the firm have interest in continuing with the process. And a lot of these deals end up following a timeline where we already have term sheets or indicated interest from a lot of other lenders.
We need you to move fast. And part of it too is a sponsor testing you on like, ‘you need to move fast because we want to work with the partner who will move fast with us.’ So we work pretty hard modeling a deal out, you know, building out an internal memorandum, which is our story for the investment. Detailing the transaction, the sponsor, the company, getting nuts and bolts on how the company works. You know, any key risks and mitigants from like a vendor contract, cost structure, industry standpoint. And then thinking internally how we want to go about the pricing we offer and any other components there. And look too, I also spend some time doing a little bit of equity as well.
And whether we can provide a lending solution that's first lien in conjunction with some other lenders. Whether we want to provide something from a one-stop shop situation where you're also contributing equity to help really carry the deal is a key component when modeling it out, when doing research, and kind of measuring returns.
Look, from there, you go to your investment committee, you figure out what needs to be addressed, whether the risks have been mitigated. And if it has been, you are able to go and get an indicative term sheet out to a sponsor. If they select you or you and another group of lenders, you might find yourself in the Midwest on the floor of a widget manufacturing company and working hand in hand with legal, the sponsor, to really assess the deal and make sure it closes and you feel very comfortable and have a strong conviction in your deal.
Tracy (18:57):
Were you ever involved in a deal where you had to take back the keys, as they say, and you ended up running the widget manufacturer accidentally?
Harry (19:07):
No, I haven't. And I think that's a function of the current credit environment where things are still okay. You know, we've had a massive rise in interest rates. I think it takes a while for that to like filter out. I think these taking the key situations are going to be an interesting storyline over the next few years.
I think, maybe to get ahead of myself, I think PIK and payment-in-kind, is a way right now for a lot of sponsors and lenders to address some of these 2021 or deals like that, that were a little weaker, and give it a little bit of a longer timeline to run. So I think at the moment we're going to see less key-taking situations. I feel a little comfortable with ‘24. It's just going to be interesting in 2025 and onwards how many key-taking situations we get.
Tracy (20:02):
Yeah. What do you think also about some of the big investment banks now getting into private credit? Because this seems to be the irony, right? It's like private credit kind of became a thing because banks were retrenching from lending, or it was harder for them to lend, but now they're getting into it and also they're sort of competing with, I guess, their own syndicated bond and loan businesses. It just seems kind of funny.
Harry (20:29):
Yeah, it's a little bizarre because it's pretty much balance-sheet lending. So, you know, it's a little interesting. I have a harder time imagining banks wanting to hold on to a lot of debt. I think the syndication market works really well from a risk management standpoint. But it'll be interesting to see how it develops. And I don't even know if I want to call it “private credit” if it's a bank doing it, right? It's just kind of like bank lending.
Joe (21:02):
Is the idea that they're going to create pools of capital to lend that aren't their balance sheet capital? That they're going to get out, essentially create some vehicle for outside lenders or outside LPs or investors, and then the bank essentially becomes the conduit for it?
Harry (21:19):
Yeah. I mean, there are some balance sheet lenders. But there are also a lot of banks looking at JV partners as well. You know, it'll be interesting to see how it develops. I think one argument for it is maybe you can graduate people from like middle-market lending to larger lending, as a company grows over time. And maybe that's a good way to have relationship management. Because I think historically you've seen a lot of middle market names graduate over time to the broadly syndicated loan market.
Joe (21:54):
You mentioned that for professionals in this space, private credit is currently more lucrative than public credit. Is that basically a function of the necessity of things like relationships or the skill level to craft the right covenant structure for the deal that, as you say, [there’s] more importance of relationships, more importance of being able to create a bespoke covenant structure that allows people in this space to make more money?
Harry (22:23):
Yeah, I feel like I've seen a lot of investment banking analysts and associates head over to private credit as opposed to them heading over to public credit. So I think that's a function of it where that skillset they have in IB makes more sense in private credit because it is very similar to what they were doing before in banking.
So I think that's the key driver. I think fund growth is a key driver. I think the returns, I think AUM growth are key drivers at the moment. And look, I think with public credit too, you know, compensation varies widely depending on where you are. And some public credit can be a lot more sleep-at-night credit as opposed to private credit, which I think needs significant diligence. Given the illiquidity, you're really digging in there and spending a lot of hours on it. I think a lot of public credit is just more hedge fund-oriented or long short oriented. I think that that compensates higher. But if it's a little sleepier of a fund, then I think it'll comp lower.
Tracy (23:33):
You actually do a compensation survey on your newsletter, I think. And I find this a really interesting aspect of some of the anonymous finance accounts now, that they are either collecting or being given information from people in the industry — primarily, I think [from] younger people in the industry. And this seems to be a big change on Wall Street. You know, it used to be, if you worked at Goldman, maybe you talked to other Goldman people a little bit about comp. But everything was kind of secret, there wasn't a lot of transparency on Wall Street. But it feels like that's changing. Even though it's, just to be clear, it's not the banks themselves that are driving this transparency. It's the actual workers, and primarily the junior ones.
Harry (24:23):
Yeah, absolutely. I think that one of the better parts of running this platform is just the compensation transparency that's been able to come out of this. Especially in credit because I think with investment banking, you can kind of figure out the structure of where analysts and associates get paid out. But once you start getting like credit associate and credit VP compensation level by city, you can provide a lot of transparency.
And I've had a lot of people come to me and say they've used it in terms of making sure they're getting compensated appropriately when getting a new job or something along that line. So I think there’s also some private equity compensation in there too, within the survey. And I run this every March, and I think you'll learn a lot from it. So I'm excited to see what I find out in the next month and a half or so.
But, you know, I think you can really learn a lot from it. And I think over time, as more followers increasingly become more senior, it’s going to be really interesting to provide more transparency beyond just the junior level and really dig into like ‘okay, I'm a mid-level professional, what should I be making? What type of carried interest should I be having?’ And I think that type of granularity is going to be good because I think, especially like the mid-level, there’s not much transparency.
Joe (25:47):
Are you cool with coming on, and Tracy, should we do a Lots More in March with the results of the survey?
Tracy (25:53):
Oh, I’d love that. Yeah.
Joe (25:54):
Yeah, come back. Can we have you back on in March and do a little mini-episode revealing the survey results?
Harry (26:01):
Yeah, let's see what happens. I mean, it comes out via my newsletter. But no, that'd be cool.
Joe (26:24):
You mentioned that you started the account in 2020, you know a lot of people at home, doing things on the internet. One of the things that I've come to appreciate about that era, or 2020 and particularly 2021, it was very evident, in, say, tech investing, that there was just this explosion of deal flow — particularly private tech investing. So maybe someone had a Substack, maybe they had 10,000 followers on Twitter, and suddenly they could like plug and play into AngelList, and they started signing over Zoom and DocuSign angel deals.
And then I sort of later on, realized it wasn't just tech. Real estate transactions, a very similar phenomenon, that a lot of people got into, you know, these sorts of crazy years and syndications of let's sort of buy up apartment buildings in the Sunbelt and stuff. And so you had all these newcomers. Can you talk a little bit about what 2020 and 2021 was like from the credit perspective or the private credit perspective, those sorts of crazy high-speed like go-go years?
Harry (27:32):
I think during that timeframe, I can speak a little more to public credit as opposed to private credit. But I think there was a lot of deal flow in ‘21 and a lot of LBOs came to the market, I think a little bit later in 2020 as well. And you had this massive rush of deals. You had investment bankers getting really worked to the brim and that provided a lot of compensation increases, where a lot of people across the industry at a junior level were all of a sudden getting like a $25,000 bump, $50,000 bump, you know, great bonuses.
And I think that was great in terms of enhancing junior compensation. But also, in terms of deal flow, you had a lot of deals get done at low rates and high multiples and were competitive processes. And you'd look at some of these deals and be like ‘God, jeez, do we really want to underwrite this? This kind of isn't good.’
And look, I think the biggest thing from this, and the more challenging part of being a credit investor, is you looked at a lot of these 2020, 2021 financials and you have this company have a gangbuster year. [They] do an amazing job. And then they come to the market to refinance or take a dividend or something like that. And then look, all of a sudden you have all these people do these deals and then you realize it was a Covid bump.
You know, you realize everyone was stuck at home and there's all these companies that had one-time big events. And now financials are down significantly relative to highs. And look, that makes up a lot of the distressed market you see in public credit at the moment. And I think this is probably a similar story on the private credit issue side as well.
And I definitely screened a lot of deals that had a gangbuster 2020 or 2021 and then really fell off, and you don't want to catch a falling knife there. I guess it's easy to say this in hindsight, but not a lot of people actually did it, was, you know, to kind of spot the trends of these aren’t really sustainable and go and invest in this type of deal because if you did, now you're looking at a distressed or more challenging situation, something that looks a lot worse relative to your underwriting. And I think there’s a lot of market participants who are now dealing with this hangover relative to 2021 and are stuck with a lot of distressed names, and worse situations, or took a hit when they didn't really need to.
Tracy (30:19):
Speaking of things not being sustainable, does it feel like the balance of power is starting to shift, I guess, away from the junior analyst? Because this was also a hallmark of the 2020 and 2021 boom times, right? Everyone was working super hard. There was so much deal flow and that kind of gave a lot of employees the firepower to start pushing back against some of their working conditions.
For instance, we saw the, I guess infamous at this point, Goldman presentation. I can't remember if it was interns or the analysts, but they basically presented or disseminated a presentation to Goldman senior management surveying their working conditions, their work hours, and making the point that things were getting worse. And they were even having to work on Saturdays, which historically was something that was preserved on Wall Street. Is that starting to shift now as interest rates go higher and maybe deal flow has ebbed significantly in 2023?
Harry (31:26):
Yeah, you know, I think that dynamic started changing even in 2022. And shout out to @litquidity on this too for getting that GS presentation out there. I think he got it DMd to him and he just posted it and that really helped spark the movement of people getting paid more.
I think this dynamic started to change when deal flow went down in ‘22, and I think that's when you first started seeing cuts amongst the junior level. There’s been some private equity and private credit junior cuts in ‘23. But I think a lot of the people that ended up worse off were people who kind of stuck around in investment banking a little too long. A lot of people who didn't get that like associate offer after their two years in banking, or I know people who got zeroed on their comp from a bonus standpoint.
Or, you know, they got a bonus, they worked like 90 hours and got a $20,000 - $30,000 bonus, which is a lot less than what you can find in public credit or private credit. I think people forgot that ‘21 was an extraordinary year and not how you want to measure future compensation. There's cyclicality and I think if we don't get deal flow ramping back up in ‘24, then I think things get increasingly challenged. And look, I think most people are back in the office at least three days a week, if not four. I'm not a fan of five days in, but I think the tide certainly has turned. But look, the reality is it's so much better than it was in 2019. So hats off from that perspective.
Joe (33:14):
Wait, just really quickly, I get you're not a fan of five days in the office. I'm just curious, do you notice any difference working in the office versus not? On productivity, on how the team operates, whatever?
Harry (33:27):
Yeah, you know, I think it depends. Look, I think if you're in a deal team structure, like if you're in private credit, I think it makes a lot more sense to be in the office. But if you're siloed off, if you're in public credit, if you're covering a certain industry and most of your communication is with your portfolio managers, then I think remote work really kind of favors that.
I think, to be fair too, a lot of people live in small Manhattan apartments. So being in the office, especially when it might be anywhere from like 10 minutes to 30 minutes away isn't that big a deal. But I am kind of bullish remote work over time, because I think for me in particular, you know, I do my job and then I also do this High Yield Harry stuff off to the side. And that involves a lot of work at my apartment. And I'm certainly productive when I'm doing that.
Tracy (34:23):
Joe's trying to bait me into another rant against return to office. I'm not going to do it, Joe.
Joe (34:28):
No, no! The only reason I ask is because it's such a charged topic that the only person I would ever trust to get a good answer [from] is someone who's anonymous.
Tracy (34:37):
But Harry, you brought up exactly what I wanted to ask you next. What are the logistics of actually running an anonymous social media account while working in the industry? And do you ever have weird situations where you're sat in the office, and someone brings up one of your memes?
Harry (34:57):
Yeah, you know, it's tough to get too granular on that, but I have a lot of people who I work with or I have worked with, who follow the account, who like my stuff all the time, who are subscribed to my newsletter. So that's always interesting. And I think it's humbling too. And someone I looked up to, like at an analyst level, who's a little bit older than me, likes my stuff and says ‘this is good’ or whatever. That's definitely humbling for me. But yeah, you know, it is a little challenging to try to navigate that, especially when someone makes a joke and you're just kind of wondering, you know, I think I'm pretty sure I made that joke on social media like a few days ago.
Tracy (35:42):
High Yield Harry, that was so much fun. Thank you for coming on and letting us disguise your voice and sound like the Riddler or a robot. I actually don't know how it’s going to turn out, but I'm really looking forward to listening. So, thank you so much.
Harry (35:58):
Yeah, thanks for having me.
Tracy (36:13):
Joe, that was so much fun. I have to ask, do you have a burner account?
Joe (36:17):
I have an alt, I've said it. It's where I post really controversial takes, like my view on the Jones Act and work from home and return to office. Things that I would not want to be associated with publicly.
Tracy (36:31):
I've often been tempted to start an anonymous alt, but I haven't done it. I am on Reddit anonymously, but I think that's pretty normal.
Joe (36:40):
That was really fun though. I really enjoyed that conversation and just sort of hearing about it from the inside, especially the fact that he's done both private and public credit. I thought it was really interesting this idea, and that hadn't clicked to me before, but it makes a lot of sense that private credit is more like IB skills — investment banking skills. And that public credit is probably just more traditional analyst skills, where you're looking at a balance sheet and you're like ‘Are they going to be able to make this payment?’ And the different skill dimensions there, not something that had really clicked to me before.
Tracy (37:13):
Very much relationship-building in private credit, but I would just push back against that a little bit, which is if you're syndicating deals in the public market, there is an element of that. Because you have to build the consortium and you have to talk to your potential investors. But yeah absolutely, it feels more IB-like.
I also thought it was interesting what he was saying about some of the pressure on speeds of deals. So the idea that, well, maybe a company is going to want to do a private credit deal because it's faster than talking to a bank. Or the bank is taking too long to, you know, tick various risk management or regulatory boxes or whatever.
Joe (37:54):
It does feel like in business there is like a real value to being able to produce cash at any time, at a moment's notice. And it feels like, you know, the rest of us plebes, if we want to buy a property [then] you go to a bank and you fill out hundreds of pages of paperwork. And then you hear back and then maybe months later it gets approved. Whereas if you actually want to do business, if you actually want to do deals in a real way, you really need to have that relationship where it's like ‘Hey, it's me, Joe. Hey Tracy, I need a million dollars because there's an opportunity to buy this self-storage space on Monday.’ And you say ‘Yeah, I know who you are, Joe. Here's the million dollars.’ And if you have that relationship, that is incredibly valuable versus the person that sort of has to go the traditional route.
Tracy (38:42):
Hey Joe, I need a million dollars to buy a chain of self-storage units.
Joe (38:46):
No, I'm not lending it to you, Tracy. I don't know your track record. And I think self-storage is overvalued.
Tracy (38:52):
Okay, fair enough. Shall we leave it there?
Joe (38:54):
Let's leave it there.
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