Stay or leave?
Equity L/S analyst with 4 YOE. Almost all of them at my current shop, a small L/S whose AUM are mostly composed of the founder's money.
Although small fund size, here I learnt a lot and PM is a very wealthy person that had a long and successful career in the HF world.
Given I'm in my late 20s and aim at having my HF one day, I have two options in mind:
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Exploit the chance to work for my current boss, with the plan to start having a track record at a certain point and aiming at ultimately receiving seed funding one day (given vast resources he has). To be seen whether he will choose to support me (very happy with my work so far)
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Try and move elsewhere asap to join a larger structure and build my way up elsewhere (here I'm in a very small team).
I tried to move elsewhere with little success so far. Wanted to get thoughts on whether option 1 makes sense or it's not a good idea and better to spend more years working for more reputable shops.
I would say the timing to move is now or the next 2yrs max. It is pretty challenging to jump seats as an analyst when you're 30/low 30s y/o, unless you have some specific, deep sector knowledge (pharma, medtech, energy, semis.. mostly). I was in a similar spot and decided to move to a more established/structured fund with higher guaranteed pay and brand, despite less portfolio exposure. I thought it was lower risk career-wise. My seed chances remain similar given the brand of my fund, even though I don't have any deep connections with potential-seeder bosses anymore.
How much money does the founder have?
>$0.5bn
That's awesome.
I would say it may be difficult to find another mentor as successful as him, where you have the access to his time. I would do everything in your power to get on his good side by showing how driven/ smart/ passionate you are and find a way to let him know you one day aspire to have your own shop.
I don't think it's that much IMO. Assuming OP does OK (slightly outperform index in 10yrs), in my experience with these guys, in that case, I bet he will put 1% max of his wealth in your new fund 10yrs from now. Assuming he will be worth $1B, that's only $10MM seed money (consider no lock-up because he likes you). If you outperform crazy, he can put say $50MM, and then you can scale this with other investors to $100-200M starter max IMO because you won't have the brand even so to start with 500MM+. So essentially you`re betting on a very long-tail outperformance for the next 10 years to justify staying in your current spot. Conversely, if you join a brand-name fund, you don`t need to outperform like crazy to get $50-100MM starter, and also you will be exposed to optionalities such as other analysts or PMs in your fund deciding to launch inviting you as the #2 or #3 partner with very good revenue share and quite derisked vs starting on your own.
You're leaving out one important factor. Are you happy with your income and the progression?
If your pay is good, you're happy where you are and you are given the ability to run money at some point, then stay.
In general a no-name small fund like this will cap your earnings potential in the long-run and it may be difficult to run your own book (and hence start your own fund).
Earnings-wise I'm fine for now. I know the potential will be capped. What I consider valuable is the option to run money & eventually open a fund within the structure. There are financial means & connections to make this possible at my shop, the only thing needed is the will of my boss to support me down the line. He seems very happy about me (had very good calls over the past 3 years) and I'm pushing myself 100% to keep doing good work.
The downside risk is to remain stuck here with no brand name, getting older as an analyst, earning not enough money to launch the fund myself, and not receiving any support from my boss.
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