Will the jump to L/S HF be possible? Or maybe a PE shop from a HY credit research position?
Hello all,
For context, I currently work at a major AM shop with over > 600bn AUM. I have been on the HY research team covering TMT and industrials for almost a year now. My goal is to move to a HF in a few years (~2 yrs). Will I be limited to a credit HF or could I pivot to an equity shop?
So currently, I read a lot of LOM, quarterly’s and build out models.
Within the models I build out the income statement, look at their ebitda, their CF, the debt schedule, their comps, credit ratings- simplified version of the model.
After the model, I then write out my investment thesis, any recent events, credit strength and risk. I then send it to trader and PM to make decisions based on my recommendation.
How will this skill set be transferable. Thank you
why do you want to leave and what is your current comp like. you likely can move to either if you have a strong resume (school/firm) and get an interview. all comes down to if you actually have good L/S ideas
Been more interested in a HF.
current comp is: 125 base bonus will be 80-100. According to first ppl 3 yrs in base becomes 175 and 200 in year 3 and four. The lowest bonus they receive was 100k and that was during the shitty market.
resume: I went to a non target. Was able to land a FIG position at a top BB. But left when I got this offer end of summer. I wanted a more investment focused path.
I think the allure is more money faster.
You gotta a pretty damn sweet gig to begin with. I would take a "grass isn't always greener on the other side" approach here. For many, you are already in THE EXIT OPP.
You are right. I’m think “the grass may be greener” term
HY research analyst at Alliance Bernstein or Dimensional is not anyone's exit opp lol, unless they had a really slow start (relative to competition of course). Your comp is fine for 1-3rd year (assuming you actually get somewhere near 80k, not guaranteed btw, doesn't matter what they told you as a 'typical expected range'). Do a year and a half here, do 3 years if you really want to be in the middle of the credit crunch shit-storm that is going to hit in the 3 year time-range and learn a lot about an incredibly interesting asset class (read the Moyer book, its a bit old, but still the best text on distressed, which is what >50% of HY will be in a not too distant time frame).
To answer your question about going to long/short fund in 2 years. It is absolutely possible, as a 25 year old with a couple of years of AB/Dimensional HY experience (esp if you have actual intellectual curiosity and really start understanding details about every sector you cover and don't cover), you can really do just about anything as long as you can talk your book. Get to understand different capital structures of the companies you look at, don't be the guy who just looks at whatever HY bonds are there and not pay attn to equity, etc, that is how you stay W2 for life. A good hedge fund analyst should know the entire capital structure and any special situations cold, of any company he/she looks at.
If you want to go above and beyond, get a simulator on tradestation or schwabb or some other platform and do an options L/S book. If you have some $k laying around, I recommend ITPM with Anton Kreil, I took it a very long time ago, but it teaches you everything about L/S portfolio management from research, to implementation, risk mgmt etc. and they have a discord with a lot of really sharp guys who have gone through the program that are easy to share ideas with and get quick feedback.
If you want to do this with real money, (I assume your firm won't let you trade without approval and 30d holding period and blacklists), do it with crypto, there is an ocean of nascent crypto data available for free and free blogs on fundamental analysis that you can implement. All of this is just so that when you get the interview you are in there talking the knowledge that you are expected to have without having to study for it.
follow the advice...or don't, many ways to reach your goals.
good luck.
nah, LO HY can be insanely boring, super repetitive and is not very well paid.
I think if you are good you can move to LS Credit.
Forget about PE, LS Equity, etc.
Private credit difficult.
why HF though and what kind exactly? just interview and see what’s out there. but generally i wouldn’t go HF with that kind of comp as a recent grad. unless you realize you have an edge on making good calls or you have a high tolerance for risk - i dont really understand your logic given your near term comp trajectory
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