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Mod note (Andy): The much anticipated BlackHat interview is here. Questions came from myself and members of writing and intern teams. BIG thanks to BH for his really in-depth/quality/quick responses. I promise all of you will have some great takeaways from this series.

If you don't know of BlackHat, he has been in the HF industry for 5 years (broke in straight from ugrad), has been one of the most active members on the site this year, and boasts a formidable 173:25 sb:ms ratio.

Here's how the four part series will go:

  1. Background / breaking into HF
  2. HF info + Money & Motivation
  3. Career advice for all you WSO Monkeys + how he advanced in his career
  4. General life tips

First Q: How did you break into HF?

(btw, try to keep your questions relevant to the current post as he will have likely already answered it in an upcoming post.)

In college I was pretty sure of what I wanted to do with myself by the time I got into my Junior year, and it was definitely some sort of investing, preferably at a hedge fund since I'd always enjoyed looking for shitty companies as well - yes, that was my reasoning for HF vs AM. Anyway, I did what everyone else was doing and applied for all the banking jobs and the few PE jobs offering summer internships, but also a few investing firms that I didn't put too much thought into. I got interviews at some of the BB banks, a few of the upper boutiques, one at a megafund PE shop, and another at an investment firm I had never heard of.

Well, turns out I hated most of the guys interviewing me at the banking stints and didn't care much for the PE place either, and the kinds of questions they were asking me made absolutely no sense to me. I instantly loved the interviewer and their description of the investment firm, and most of our conversation was just about stuff going on in the markets, investment philosophy, and what we thought of certain businesses. I absolutely loved it and ended up taking an offer at this firm, which was a bit of an AM/HF hybrid, but focused intensely on value.

I think I got a really good experience there learning how to develop my own investment thesis from like-minded investors who were - strangely enough - actually happy to help me think through my ideas without seeing any tangible benefit for themselves. Not sure how many of those shops are left on Wall Street, but I was lucky enough to land at one out of college. From there, I got a call one day from a headhunter asking if I wanted to take a job at what was a pretty hot hedge fund at the time, and I said why not. I liked the guys there and knew someone who worked there already, so I think I kind of fooled myself into taking the job because it offered better pay and an opportunity to finally be in a 'pure' HF. Looking back I regret that decision, but it helped me get where I am now I guess, so whatever.

After about 1-1.5 years there I couldn't take it anymore, saw the writing on the wall, and got back in touch with the headhunter who poached me from before. Luckily my skill set as a deep-value focused guy was pretty well-defined and he referred me to a fund that put a heavy emphasis on concentration and value, and I took an interview there despite the fact that they weren't hiring (but apparently they never are). I ended up finishing the interview with the PM telling me "well, we like you. Nice meeting you. Bye." My headhunter got in touch to see how the interview went and I told him about how it ended, and he said that was their way of offering me a job... strange, but I called them back up and said "Let's do it!" and here I am now. I love where I'm at now, I got the opportunity to move up quickly, and I'm essentially running my own money now so I couldn't have asked for more freedom than I got here.

Did you go to a non-target, semi-target, or target school?
I guess I went to a "target" but I hate calling it that. As some of you know I'm not afraid to say I went to Penn, specifically Wharton for those of you who need to make that distinction. It was a great school, helped out immensely with recruiting since it was one of 2-3 schools the place I interned at recruited, and even though I would have had much more fun at a Big Ten school I never regretted the decision. That said, I'll never give a dime to those guys for screwing my dad so hard on financial aid. They've got more than enough from me and my family.

How did your background best prepare you for where you're at now?
I guess I've always been a pretty inquisitive person, always interested in the way businesses worked and all that crap that most people say about why they like investing. But outside of that, I think growing up in a competitive household, playing sports and being constantly put in situations that forced me to compare myself to other people kind of pushed me towards working in an environment like a hedge fund. We're constantly trying to figure out what we can find out that nobody else is going to think about that will give us an edge, and for me personally I think having that mindset from a young age helps me look for the right things when I'm evaluating a business.

I also think it's helped me be a really good judge of character, and that's an often overlooked part of the business when it comes to assessing management and finding well-run companies. Sometimes you can tell when management is full of shit and when something is legitimate, and just being around people and having to discern the difference in my social life was another thing that helped me prepare for the role I'm in now. We were a very superficial and socially-elite neighborhood, albeit we had no reason to be so stuck up.

You mentioned drugs and a near-death experience in a previous post, do you care to talk about how that's affected your life?
(see below for tl;dr version) Sure. It's a lot longer of a story than this, but back in high school I started getting pretty seriously depressed, and not because anything in particular ever happened, just because I was the kind of person who just thought too much and for whatever reason dwelled on the pessimistic and what was bad in the world. Things always came easily to me and I still never enjoyed any of the supposedly 'good' things going on in my life, so seeing the rest of my friends and the people around me enjoying the most mundane things got me really depressed. It's a lot more complicated than that but for the sake of length I'll move on. Anyway, I started doing a lot of drugs in high school with a girl I'd been seeing who was equally unhappy with her life, and from there things pretty much spiraled out of control. By sophomore year of college I had pretty much done every drug under the sun and had a legitimate addiction to one in particular.

My parents ended up finding out when I came home for the summer and they went as far as to send me to rehab, which was the worst place in the world. I don't know how many of you have any idea what most rehabs are like, but they're not great places unless you're a celebrity apparently. Anyway, in rehab I got so depressed and felt so cut off that I had this idea that I'd just kill myself, so I got ahold of the only thing I could - a 500 count bottle of Tylenol ExtraStrength. To this day I still can't even see the label on that stuff without it absolutely breaking me down. So I was later told that I ingested 180 of these bad boys, and luckily someone from the staff noticed me and I got rushed to the ER. I'll spare you the details but it was an extremely unpleasant process.

Once I got out of the hospital my parents took me home and I spent a few weeks with them before going back to school. Now that I think back on it I really didn't spend much time at all back home, that was probably a terrible idea sending me back like that. Anyway, that experience and how quickly it turned around and everything was almost 'back to normal' in the outside world kind of made me realize how ... not-special I was. I ended up adopting that perspective on things and it actually helped me to kind of embrace who I was and the way I thought about things. Society had a name for me, I was "depressed," but I don't see why that's a good or bad thing, it's just a thing. Seeing the world the way I did wasn't a big deal, and if it was how I was gonna function for the rest of my life I figured I might as well make the best of it. Since then I've still occasionally used but always in as responsible a way as one can use, and it hasn't affected me negatively ever since. That's not to say that it won't in the future, but I'm okay with that, as I'm okay with depression or not caring if I'm alive or dead, or anything else.

The tl;dr version of that entire story is that I made some big mistakes early on but ended up finding a way to use those to figure out who I was, then do the best I could with it to get what would satisfy me out of life. If anything, seeing the world this way makes you a much more objective, albeit often unemotional, observer. That definitely helps me at work, but I'm not trying to paint that into being a plus. Speaking of emotion, it wasn't the end of the world for me because I ended up finding someone who understood me as well as I understood myself, and all that emotion that I hadn't had in so long kind of came back to me. So if any of these things sound familiar to you, know that there's hope for us yet.

Continue to Part 2
Continue to Part 3
Continue to Part 4

14

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Comments (63)

  • BlackHat's picture

    Yeah - like Andy said I'm open to answering questions as they related to the stuff discussed in this part of the interview. Thanks again to Andy and crew for setting stuff like this up for WSO. I'm sure there's some other great interviews comin' up and it's an awesome idea, so big thanks to those guys for putting this all together.

    I hate victims who respect their executioners

  • In reply to BlackHat
    animalz's picture

    BlackHat:
    Yeah - like Andy said I'm open to answering questions as they related to the stuff discussed in this part of the interview. Thanks again to Andy and crew for setting stuff like this up for WSO. I'm sure there's some other great interviews comin' up and it's an awesome idea, so big thanks to those guys for putting this all together.

    going to the gym, will post some questions afterwards/tomorrow

    great stuff, +1

  • AndyLouis's picture

    I took an interview there despite the fact that they weren't hiring (but apparently they never are). I ended up finishing the interview with the PM telling me "well, we like you. Nice meeting you. Bye." My headhunter got in touch to see how the interview went and I told him about how it ended, and he said that was their way of offering me a job... strange, but I called them back up and said "Let's do it!" and here I am now.

    interesting.... lol "well, we like you. Nice meeting you. Bye."

  • Knowledge Kick's picture

    Did you grow up as a "rich kid"? Be honest.

    http://DollarDrip.com Username: Knowledge Kick

  • nauprillion's picture

    Could you maybe shine some light on the key differences between HF analysts coming from an asset management background, those from an IBD background and those from an ER background?
    - Which type have you seen perform best and why (based on your experience)?
    - Which background do you think is the most applicable to lets say a L/S equity HF?

    Have you ever seen someone making the move from equity sales to HF?

    Thanks

  • In reply to Knowledge Kick
    Bearearns's picture

    Knowledge Kick:
    Did you grow up as a "rich kid"? Be honest.

    Screwed my dad on financial aid. Me thinks not.

    Thanks for sharing. You mentioned the other hedge fund not being a good fit. Care to share why it wasn't a good fit( was it investing style as you seem to be more value oriented)? Was there anything else besides investing style.

    Those breaking into the hedge fund world and coming from nonhedge funds, what is their typical background? Is BB the norm? Those not coming from BB, what separates them? Thanks.

  • Aragorn's picture

    Great interview, BH. Looking forward to part 2.

    "Rage, rage against the dying of the light." - DT

  • Febreeze's picture

    BH... pump my stock.

  • Abdel's picture

    If you tried most of the drugs (crack, heroin, etc.), how in the world did you manage to stop using them?

    I mean, from what I've heard, it is impossible to stop using them once you try them.

  • BlackHat's picture

    It's storming, which is preventing me from going home, so I'll tackle as many of these as I can before someone starts bothering me.

    KnowledgeKick:
    Did you grow up us as a "rich kid"

    My parents were in that income range where you pretty much have enough to not be called "poor" but don't have nearly enough to be considered well-off. That puts you in an awkward section of the middle class, and like I said, it ultimately is the section that gets screwed the hardest by financial aid. My parents probably made around 140-150k between the two of them, raising 3 kids. For a while that works out but unfortunately the way Ivy League tuition worked at the time (I've been told it's changed a bit), that's the income level that gets royally fucked. My brother, who's a bit older, was the first to go to college, and that tuition bill was around 25k. Once I got in and he was still in, the bill became 75k for the two of us, and we were given NO financial aid, though I had friends whose parents made more, yet they were getting free rides based on need. For what it's worth they were minorities too. But anyway, I'm getting ahead of myself here - growing up we were just an average family, I never got anything cool to play with and to a certain extent felt a little on the poor side since we were in a somewhat wealthy community, so no... I was not a "rich kid."

    nauprillion:
    Could you maybe shine some light on the key differences between HF analysts coming from an asset management background, those from an IBD background and those from an ER background?

    Depending on what kind of AM we're talking about, I notice that these guys have a lot less of a learning curve to get over, and they're a little more equipped to hit the ground running if the type of research/analysis they were doing in their previous job is similar to our investment philosophy. So AM guys coming out of Value funds and some Large Cap Growth funds are pretty marketable at a L/S fund with an emphasis on value. Bankers on the other hand are much better at modeling and they have no problem transitioning to the hours though at first require a little bit extra hand-holding to get them to be more or less autonomous. Sometimes I've seen bankers that just never end up "getting it," and they'll try to jump to PE or something, which I think is a lot more suitable for a banker than a place like ours which is so research-intensive and long-term focused. ER guys are pretty similar to AM, though again you have to get them out of that mindset of only caring about next quarter's earnings numbers, and get them more in tune to focusing on a longer horizon. This is all from the perspective of a guy evaluating candidates for a position at a fund like mine, which is heavy-value, L/S, long-term horizon investing for the most part.

    Have you ever seen someone making the move from equity sales to HF?

    None that I know of unfortunately.

    JoshFi7:
    You mentioned the other hedge fund not being a good fit. Care to share why it wasn't a good fit( was it investing style as you seem to be more value oriented)? Was there anything else besides investing style.

    It was a fund that ballooned really quickly in terms of AUM because we had a high-profile manager who made a lot of headlines when he started, and they had been pulling in good returns in the year leading up to when I got there. Maybe I was bad luck or something, but the next year wasn't so hot and people started to head for the door. Other than that though, the fund had a lot of analysts and a more bureaucratic structure than I was used to. Junior analysts didn't source their own ideas and had to work under a PM who worked under the head guy. The investing style was all "quick buck" focused, which was fine for a little while but really not my cup of tea. We'd sometimes get told to do research on a certain thing about a company the PM wanted to know, without any idea if we were thinking about the idea as a long or a short, and sometimes we didn't even know what company we were doing research for. There was really no collegial environment and I felt like a drone rather than an analyst. The pay wasn't bad or anything but at a certain point if you're not enjoying your job anymore you have to make a move.

    Those breaking into the hedge fund world and coming from nonhedge funds, what is their typical background? Is BB the norm? Those not coming from BB, what separates them?

    Coming from investment banking is most definitely still the norm, and particularly BB as you'd expect. There's really no noticeable difference between BB and elite boutique though to most HFs (think BX, GHL, Evercore, etc.) and to a certain extent, the more multi-strategy and larger the fund, the more they prefer bankers. We focus on heavy concentration and pay a lot of attention to value, so we're not banker-heavy, but a place like Bridgewater that has enormous AUM and a dozen PMs managing it is going to prefer bankers who can crunch numbers and pound the pavement doing diligence for their PM. Obviously my firm is biased against bankers and as an extension, so am I, but it is by far the most traditional and best route to go if you want the best shot at "breaking in" to the HF industry. Those not coming from banking, however, are usually either ER analysts or more experienced associates that we've noticed over the years are very very good at what they do and have been reliable resources to us in the past. Also, coming from a name-brand asset manager, preferably run by a superstar PM, is a great way to break in. For example, if you're working directly for Peter Lynch we're never going to turn you down for an interview, even though we "don't hire."

    I hate victims who respect their executioners

  • In reply to Abdel
    BlackHat's picture

    Abdel:
    If you tried most of the drugs (crack, heroin, etc.), how in the world did you manage to stop using them?

    I mean, from what I've heard, it is impossible to stop using them once you try them.

    Rehab. And it didn't help at all. But after that I spent some time being almost dead and that kinda helped. I was never addicted to any of the standard drugs when you think of "street drugs," but I tried them all from time to time. Addiction is very real, but there's ways to manage it and I've (unfortunately) gotten experienced enough with them now to know when I can and cannot use, and which ones my body will be able to resist and which ones it won't. Plus the fear of ever going back to rehab is a powerful motivator for getting carried away.

    I hate victims who respect their executioners

  • In reply to BlackHat
    West Coast Analyst's picture

    BlackHat:
    Yeah - like Andy said I'm open to answering questions as they related to the stuff discussed in this part of the interview. Thanks again to Andy and crew for setting stuff like this up for WSO. I'm sure there's some other great interviews comin' up and it's an awesome idea, so big thanks to those guys for putting this all together.

    BH, SB for you! No questions as I've been a very avid follower of your posts/comments and contributions.

    Well maybe one Q: Asian girls > *?

  • In reply to BlackHat
    Abdel's picture

    BlackHat:
    Abdel:
    If you tried most of the drugs (crack, heroin, etc.), how in the world did you manage to stop using them?

    I mean, from what I've heard, it is impossible to stop using them once you try them.

    Rehab. And it didn't help at all. But after that I spent some time being almost dead and that kinda helped. I was never addicted to any of the standard drugs when you think of "street drugs," but I tried them all from time to time. Addiction is very real, but there's ways to manage it and I've (unfortunately) gotten experienced enough with them now to know when I can and cannot use, and which ones my body will be able to resist and which ones it won't. Plus the fear of ever going back to rehab is a powerful motivator for getting carried away.

    You're a lucky one. I have 2 cousins going through rehab right now and it doesn't seem to work.

    Anyhow, glad that you managed to save yourself and thanks for sharing such a personal story.

  • Disincentivy's picture

    I applaud your sincerity. Une Banane

    I may not be on the Jedi Council, but I sure am great with the Force.

    See my WSO blog posts

  • jpmoranmonkeysachs's picture

    So how did you manage turn your whole life around? I am guessing UG probably took about 5 years. What drastic steps did you take that made a huge difference? Weren't potential employers wary of this?

    Sorry there are too many questions. I guess you can just lump it up together when answering.

  • In reply to SF_Reg
    BlackHat's picture

    chimpout:
    no hate, but family income in the region of 150k makes you very well off even if it is precisely the range that gets fucked by financial aid.

    that's more than anyone i knew growing up, so id say you're a bit of a whiny fag.

    Oh is that what you'd say?

    Not that I assume you know anything about math, life, or what it means to make a decent living, but if we run some numbers really quickly it works out a bit like this. 150k * 33% taxes, down to 100k after tax. Shave 75k off that for tuition for my brother and me thanks to the lovely folks in the financial aid office, now we're at 25k which becomes 10k after a year's worth of mortgage. So 10k for my parents to feed themselves and my little sister. Oh but let's not forget rent/books/living expenses for my brother and I who live in more expensive areas now. That 10k alone could hardly cover our rent, let alone food/clothing/textbooks/misc expenses. So my brother and I did our best working during college and also taking some unorthodox routes to making money (both played online poker literally for a living, I managed a bit of money from our winnings and for a local guy's business) to help float the family throughout the 4-6 years my brother and I were in school together. Luckily by the time I got a job after graduation I was able to send some money home to help my dad pay back all the loans he had to take out to cover everything, and of course paying for grad school for my brother which was another 30k a year. But I'm proud to say the family is debt free now, and even though I'm a whiny little fag and my family was EXTREMELY "well off" during that period, we were able to make it just fine. I'm sure your impoverished ass had it way harder though, so I'll be praying for you guys. Hook me up with your PayPal and I'll try my best to make some donations.

    I hate victims who respect their executioners

  • In reply to SF_Reg
    chimpout's picture

    i'm from a rural part of the UK - hardly the ghetto though.

    i would bet that 150k puts you easily in the top 20%, possibly 10%

  • In reply to BlackHat
    happypantsmcgee's picture

    BlackHat:
    Just can't stop those new user accounts from hatin'

    You're probably just bored, stuck at your desk during that storm and are trying to mind fuck everyone by talking shit to yourself.

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • Dedline's picture

    Great interview and I'm looking forward to the future parts. Sorry if I'm getting a greedy with the questions but I'm trying to paint a picture; What did you do with your spare time in college, what kind of person do you typically hang out with and what type of person do you usually attract? I ask because I have been down the road you have and was wondering how you came out of it personality wise.

  • Strengthftw's picture

    So it seems ER/AM first would be the preferred way to getting into a L/S value hedgefund that allows you to work your way into sourcing ideas? As you said, IB is the standard of getting into a high AUM firm but you have a higher chance of becoming more "model" oriented worker.

    It's easier to break into the HF industry starting as an IBer but it seems you would learn more in ER/AM because you are directly dealing with the market instead?

    Would you then say that IB is the "safer" way of breaking in and ER/AM the non-standard but the way to go to learn.

    Of course breaking into HF's would be preferred out of undergraduate but I don't think you could count on it.

  • In reply to jpmoranmonkeysachs
    BlackHat's picture

    jpmoranmonkeysachs:
    So how did you manage turn your whole life around? What drastic steps did you take that made a huge difference? Weren't potential employers wary of this?

    I spent a few weeks in rehab before the incident and then my parents pulled me out of there and brought me back home which was probably the best thing for me. I didn't spend too much time back home before going back to school and just basically resuming college life, so all in all I probably missed about 2-3 weeks of school since they pulled me out over Christmas Break and I probably got back to school in early-mid February.

    Turning my life around basically just required me to accept the things I couldn't change about myself, and if anything I guess the most drastic step I took was keeping myself from drinking or doing any drugs until the school year was over. After that though I felt like I had control of myself again and I edged back into it, for better or for worse, but it hasn't been a significant problem ever since, because I think I know what could happen if it gets out of hand again. And no, I don't believe you're required to tell employers about going to rehab or anything like that, or at least I never did. And I graduated a semester early actually.

    I hate victims who respect their executioners

  • In reply to happypantsmcgee
    BlackHat's picture

    happypantsmcgee:
    BlackHat:
    Just can't stop those new user accounts from hatin'

    You're probably just bored, stuck at your desk during that storm and are trying to mind fuck everyone by talking shit to yourself.

    90% of the users on this site are just extra accounts I made to entertain myself. Unfortunately one of them got banned... [RIP Swagon]

    I hate victims who respect their executioners

  • In reply to BlackHat
    happypantsmcgee's picture

    BlackHat:
    happypantsmcgee:
    BlackHat:
    Just can't stop those new user accounts from hatin'

    You're probably just bored, stuck at your desk during that storm and are trying to mind fuck everyone by talking shit to yourself.

    90% of the users on this site are just extra accounts I made to entertain myself. Unfortunately one of them got banned... [RIP Swagon]


    Wait, I thought I was the only one that did that...

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • BlackHat's picture

    Heist:
    What did you do with your spare time in college, what kind of person do you typically hang out with and what type of person do you usually attract?

    Most of my friends didn't actually come from my school. I ended up getting really involved in MMA and spent a lot of time working out off-campus with a team, and I'd say most of my friends that I'd go out with on the weekends were from my MMA gym or were athletes at my school. As for what kind of people I attracted... pretty much more of the same as far as women went. If I could describe the kinds of women that were attracted to me, the only thing that comes to mind (sadly enough) is "damaged goods." Took a while to climb out of that, not sure if I ever did... haha

    Strengthftw:
    It's easier to break into the HF industry starting as an IBer but it seems you would learn more in ER/AM because you are directly dealing with the market instead?

    I'd say ER or some AM jobs are more similar to what you'll do as an HF analyst, but most jobs are still recruited for through IBD because it's pretty much the case that employers see banking as where the most capable candidates go out of undergrad, and they then see them as the best potential analysts, so most funds are looking at bankers first and foremost, though ER and AM are still decently well-recruited and represented just fine in the HF space.

    I hate victims who respect their executioners

  • In reply to chimpout
    onepercent's picture

    chimpout:
    i'm from a rural part of the UK - hardly the ghetto though.

    i would bet that 150k puts you easily in the top 20%, possibly 10%

    Anyone making over 50k is in the top 20%. Living in the middle of NYC making 150k for a family of five, basically means you live in a studio or you live off credit cards. The quality of life you have is dependent on a large number of variables, including the cost of living in your area. It's all relative.

  • historiclegend's picture

    How did you motivate yourself coming out of rehab with no enjoyment from life?

  • In reply to historiclegend
    BlackHat's picture

    historiclegend:
    How did you motivate yourself coming out of rehab with no enjoyment from life?

    I don't think motivation is the right word for what gave me the ability to continue to function. I've always had very high standards for myself and the way it's worked is that if I can meet those standards then everything is just "ok" or nothing changes. I don't really get a lot of satisfaction out of it, but I kind of just accept that's how I am. Some part of me cares about following those standards though and whatever that is would be my 'motivation' I suppose. The way I described it once to my [required bi-weekly...luckily not anymore] therapist once was that I have "the smallest amount of motivation necessary to not want to die."

    Things have changed a lot now that I'm going to be having/starting a family. It's not just about me anymore so I think there's motivation to fulfill that responsibility now. Hopefully that feeling persists for a while.

    I hate victims who respect their executioners

  • See_ya's picture

    I'm not sure if I missed this but did you do any IBD/PE internships over your first three years in college?

  • Imperialian's picture

    Hi

    is age a factor to break into a hedge fund? say u did some thing irrelevant after graduation and took a MSF to rebrand yourself. What is the oldest age you have seen for someone fresh to break in?

  • In reply to BlackHat
    historiclegend's picture

    BlackHat:
    historiclegend:
    How did you motivate yourself coming out of rehab with no enjoyment from life?

    I don't think motivation is the right word for what gave me the ability to continue to function. I've always had very high standards for myself and the way it's worked is that if I can meet those standards then everything is just "ok" or nothing changes. I don't really get a lot of satisfaction out of it, but I kind of just accept that's how I am. Some part of me cares about following those standards though and whatever that is would be my 'motivation' I suppose. The way I described it once to my [required bi-weekly...luckily not anymore] therapist once was that I have "the smallest amount of motivation necessary to not want to die."

    Things have changed a lot now that I'm going to be having/starting a family. It's not just about me anymore so I think there's motivation to fulfill that responsibility now. Hopefully that feeling persists for a while.

    +1 thanks.

  • In reply to See_ya
    BlackHat's picture

    See_ya:
    I'm not sure if I missed this but did you do any IBD/PE internships over your first three years in college?

    No, I had one internship after my sophomore year working unpaid for a no-name asset management firm but other than that no other internships...

    is age a factor to break into a hedge fund? say u did some thing irrelevant after graduation and took a MSF to rebrand yourself. What is the oldest age you have seen for someone fresh to break in?

    I think the oldest I know of someone getting their first HF job is around 30-32. That's someone who spent a lot of time at a buy-side firm already (AM) and was managing money, but finally decided he wanted to try making the move over to a hedge fund rather than working for a large mutual fund company. I don't think age is necessarily a factor but, in a practical sense, most people breaking into buy-side shops for their first time are those who spent some time on the sell-side doing banking or whatever - usually 2 to 4 years - and that puts most people at 24-26. I wouldn't imagine there being too many restrictions on someone who worked outside the industry after undergrad and then got a brand name MBA or something. I'm not too sure though.

    I hate victims who respect their executioners

  • Onetwobit's picture

    Solid interview...certainly did not see the post going into that direction though lol.

    #2 should be good.

  • Jeenyus's picture

    What's your perspective on hedge fund recruiting out of 2-year megafund PE programmes?

    I considered both HF and PE when recruiting, but ended up in the latter because I valued the optionality. Long-term, however, I can see myself at a deep value fund with a concentrated portfolio or possibly an activist fund. I've seen some anecdotal evidence of this happening, such as Greenlight writing about hiring a guy out of BX PE in one of their letters, but would be interested in hearing your perspective

  • NYorbust's picture

    I'd assume that BB traders aren't getting recruited by your firm because it is L/S, but from your experiences in the HF industry at large, which desks would you say give a trader the best opportunity to move to a HF after a few years if they decided they had enough at a bank?

    And which strategies would allow former BB traders to be making investment decisions and not be solely execution? Mind mentioning specific funds that meet this criteria?

    Have you seen BB traders go to B-school and come out at a L/S fund or other long-term value approach?

    Thanks for the post!

  • In reply to NYorbust
    nauprillion's picture

    NYorbust:
    I'd assume that BB traders aren't getting recruited by your firm because it is L/S, but from your experiences in the HF industry at large, which desks would you say give a trader the best opportunity to move to a HF after a few years if they decided they had enough at a bank?

    And which strategies would allow former BB traders to be making investment decisions and not be solely execution? Mind mentioning specific funds that meet this criteria?

    Have you seen BB traders go to B-school and come out at a L/S fund or other long-term value approach?

    Thanks for the post!

    Did you just say that traders usually don't make a move to L/S equities?
    I know a guy who used to run an equities prop desk at a BB who moved over to a L/S equities fund where he basically had his own book alongside other traders while there was another team that made more long-term decisions. Since then he has worked at two other funds in a PM role. And he's told me that this really isn't that unusual...

    I guess it varies a lot. After all there are many L/S equities investment styles.. Just my 2 cents.

  • Slugger's picture

    I was wondering about your training at the early stages of your career? As hedge-fund typically do not have the infrastructure to train its people especially straight out of undergrad.
    How did you prepared yourself for jumping to the deep water without prior experience or training ?

    Thank you for the insights.

  • In reply to Slugger
    BlackHat's picture

    Raider:
    I was wondering about your training at the early stages of your career? As hedge-fund typically do not have the infrastructure to train its people especially straight out of undergrad.
    How did you prepared yourself for jumping to the deep water without prior experience or training ?

    Thank you for the insights.

    I was always really interested in investing and in college started investing a bit more seriously for a group of people, so I was pretty much teaching myself a lot about investing in high school and then getting some more legitimate experience in college investing larger sums. Read books, invest on your own, make mistakes and learn from them, etc. and most importantly if you legitimately enjoy it you will want to learn more and that'll make it easier on you.

    So the short answer is I self-taught enough that the on-the-job training that I did get once I started working full-time wasn't very significant, and the best learning experience at that point was just being around my co-workers who knew a hell of a lot more than I did.

    I hate victims who respect their executioners

  • John Rolfe's picture

    Hey Blackhat. I will be starting at a large AM soon. I remember you saying that you had good people to work under when you got out of college. What was it, specifically, that they did that made them so good to work under? Thanks.

  • In reply to John Rolfe
    BlackHat's picture

    <a href=http://tinyurl.com/3zap9yh rel=nofollow>John Rolfe</a>:
    Hey Blackhat. I will be starting at a large AM soon. I remember you saying that you had good people to work under when you got out of college. What was it, specifically, that they did that made them so good to work under? Thanks.

    Pretty much just being in more of an intellectual environment rather than a competitive one is what I think made my co-workers so helpful to me. It was more of a team atmosphere than something where people are fighting for face time and top bucket status. Everyone was really open to helping out and giving you tips or advice and good feedback, etc. Having an extremely smart manager to work under was helpful of course, and reporting directly to him was probably why I got such good feedback and was able to kind of learn an investment philosophy from him and incorporate it into my own thoughts on certain ideas. If you look at most managers out there today, they all kind of cut their teeth working under someone else and then tailored what they learned to their own experiences, and I think that's what's really important is just finding a mentor but making sure to create your own identity and not just mimic your boss.

    I hate victims who respect their executioners

  • sofa king smooth's picture

    Hey man thanks for the post,

    Studying Mathematics & Economics at a top west coast schoo, entering my junior yearl. Did a 4 month internship in M&A IBD and was definitely turned off to the work, culture, etc. and like you would love to go straight to buy-side, preferably at a value hedge fund that will develop my skill like you had. We definitely share the same sentiment about banking. I've reached out to you before, but this time if possible I'd love some advice about what steps I should take. I've been reaching out to HF alumni from my school and doing reading on a lot of the main texts for value -- Security Analysis, Intelligent Investor, Klarman, etc. Spoke to a guy from SAC that said IBD is a must, spoke to another that said CFA is a must...neither of which I was planning on doing. What are your thoughts on what you would do if you were in my shoes?

  • In reply to sofa king smooth
    BlackHat's picture

    sofa king smooth:
    Hey man thanks for the post,

    Studying Mathematics & Economics at a top west coast schoo, entering my junior yearl. Did a 4 month internship in M&A IBD and was definitely turned off to the work, culture, etc. and like you would love to go straight to buy-side, preferably at a value hedge fund that will develop my skill like you had. We definitely share the same sentiment about banking. I've reached out to you before, but this time if possible I'd love some advice about what steps I should take. I've been reaching out to HF alumni from my school and doing reading on a lot of the main texts for value -- Security Analysis, Intelligent Investor, Klarman, etc. Spoke to a guy from SAC that said IBD is a must, spoke to another that said CFA is a must...neither of which I was planning on doing. What are your thoughts on what you would do if you were in my shoes?

    Considering the dude is at SAC, I'd say they take mostly bankers or traders so that makes sense for him to say that. But if you want to work at a value HF like you say, SAC is not that kind of place, and the culture is probably very similar to that of banking. You're on the right path by reading the books and getting yourself acquainted with investing, and you'd be surprised how many people don't do that very simple amount to get themselves ahead of the average candidate. If you're at a reasonably upper-level school then I'd guess a lot of buy-side firms will actually recruit on campus. If that's the case, just demonstrate your desire to be working on the buy-side, and hopefully your personality will click with one of your interviewers. IBD is definitely not a requirement for these places and in some cases can be a detriment, so don't be scared that you "have to" be a banker first. Keep reaching out to alumni and hopefully something pops up, there's not too much more I can say than to advise you to just go for it. And the CFA is definitely not a must, though it could help if you're not at a business school. But still, not a must.

    I hate victims who respect their executioners

  • graham-newman's picture

    Hi BH, excellent post and I forsee more good things to come. Thanks in advance.

    Just wanted to comment that im not sure in US but elsewhere it seems that there are a lot of value pretender funds who almost always hire IBD from BB. Im honestly dissapointed. I have reached out to many fundamental funds but their response is always the same.

    They would rather believe a recruiter and hire a summa cum laude BB IBD guy than to someone with decent grades, strong research and critical thinking mindset and experience. All they need is fork out some time, sit down and talk over things and perhaps throw a few case studies or names to let the candidates mull over and display his or her talents. Its not hard to sit down and chat and find out honestly what truly motivates the candidate rather than the usual HR bs of tell me your strengths and weaknesses.

    Personally if I were to run a firm, Ill rather take the extra effort and hire someone with the right fit than have loads of infighting. I was previously from a major fund and found the fit too short term for my liking, similar to what you have found.

    Hope to keep in contact with you BH, Im thinking of heading over to US for further studies and probably some work if possible. The possibilities for a young man or woman with some intelligence, common sense and a lot of hard work are huge.

  • duke1's picture

    BlackHat, thanks for sharing your story. From the perspective of someone looking to get into HF, it's helpful to hear one possible path that worked.

    For those of us who didn't make it out of ugrad and are now a couple years out of school, what kinds of tips can you offer that can help make it into HF? Networking and meeting someone for works for a fund seems like an obvious way to make progress. Are you ever in a position to do interviewing/hiring? What can you recommend based on what has worked for others? I'm looking for ideas about how to make contact/land the initial interview -- from there clearly it's up to me to nail it.

  • In reply to duke1
    BlackHat's picture

    duke1:
    BlackHat, thanks for sharing your story. From the perspective of someone looking to get into HF, it's helpful to hear one possible path that worked.

    For those of us who didn't make it out of ugrad and are now a couple years out of school, what kinds of tips can you offer that can help make it into HF? Networking and meeting someone for works for a fund seems like an obvious way to make progress. Are you ever in a position to do interviewing/hiring? What can you recommend based on what has worked for others? I'm looking for ideas about how to make contact/land the initial interview -- from there clearly it's up to me to nail it.

    If you're working in the finance space right now, meeting contacts through work is the best way to go about it. The only times I've been involved in hiring/recruiting/etc. was when we came across someone like a particularly intelligent sell-side analyst who we found helpful and proved he actually knew what an investor would care about rather than just spitting out short-term EPS numbers and sending us books full of charts. You run into guys pretty often regardless of what area of finance you work in, and keeping those contacts or at least impressing them and showing that you're interested in making a switch someday (or right now) is enough for them to at least respond when you call them up a few months down the road.

    I hate victims who respect their executioners

  • darth_sidius's picture

    Hey BlackHat, thanks for this post, great of you to take time out and help the rest of us. I know that breaking into HF right out of UG or without the 2 years of IB is highly unlikely, so it's always inspiring to hear someone doing it.
    I was in consulting (so I don't have the IB exp) but I quit to take up a Masters in Finance in a top European university this fall. I'm interested in breaking into HF someday, and I've been working towards that by reading the important books, following the markets and even doing some of my own financial statement analysis. I've done CFA level 1 and will be writing level 2 next year. I'm allocating my savings to the masters, so I don't have real money to invest but I have been using one of the play money investing sites. I know none of this comes close to real work experience in finance so I wanted to know if it would be realistic to shoot for the HFs in London right out of the MS, or start with ER/AM and then make the move to HF later.
    Thanks again for your post and I look forward to the remaining parts. If you are coming to the WSO Conf please pm me, I'd love to meet you in person.

  • NGW's picture

    If you don't mind me asking, what became of the girl that did drugs with you at the beginning? Did she end up going through the same stuff you did in college?

  • Bear.of.Wall.Street's picture

    You said being in IBD is better for recruiting and er/am prepare you better for the job.

    Here's a question. If someone is from a bb ibd in hk, and the other from bb er in nyc, who would you think would likely land a hf gig and why?

    I

    I know that diamonds mean money for this art, but that's not the shape of my heart.

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