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April 30, 2024
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Depends on the type of fund as well as the PE funds vs. the HF. If it's a megafund or a top MM PE fund, PE hands down especially if you want to move to a top-tier fund like a tiger cub or a top activist fund. If it's a lesser known MM PE fund, would still say PE, though the faster money funds (like a millennium) will hire a very decent amount from equity research especially if the analyst you'll be working for is highly regarded
So, even if it is a small PE fund you would say it is better than getting ER experience? I feel some fundamental funds would value actually making stock investment ideas rather than a deal but that is just my point of view. That being said, i do know that PE gets a much better wrap in terms of prestige.
It depends on what you're trying to do.
For a L/S stat arb role, we look for a mix of relevant industry experience and quantitative ability. ER is definitely helpful-- so can PE, but then we want to interact that with a quantitative background and the ability to pick out themes in the market for a junior role. In a more senior role, we generally look for prior PM experience and experience understanding how a gigantic portfolio works where the machine ultimately makes the buy and sell decisions.
For a more fundamental type portfolio, I can't speak to that very well. It's two totally different cultures-- it would be like you being interested in government jobs, me working at the federal reserve, and trying to comment on what it's like at the FBI-- or how to get in-- because I work for the government too.
Thanks for the response. Yeah, I am more of a fundamental type so not much of a quant guy in terms of my long-term goals. But, I think a quantitative background is going to be more and more important in the future as my view is more than half of firms will be some sort of quant type with next generation coming up.
I went from IBD to PE to a L/S HF, but I would say go with a BB ER firm if that's what you have.
However, if it's a legit PE shop ($1bn+ mid market to megafunds), then go with that. Most funds are well aware of all the crappy sub $300mm "PE" gigs out there where you're doing mostly ad-hoc work and pushing paper around. If that's the type of fund you're looking at, go with ER.
Thanks for the input. It is not going to be BB ER either still feel I am going to choose that route - would enjoy it more anyways. Would you say your IBD or PE gig helped you more in terms of being prepared for what you currently do at the L/S?
To your last point, definitely do not want to be a paper pusher.
Neither job was directly helpful to my current job, though If I had to pick, the PE job was probably more relevant because the most important aspect of L/S equity is to be an investor and understanding your assumptions vs. everyone else's assumptions, which is something you spend 0 time doing on the sell side.
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