I had a number of questions about Citadel's global equities team because I recently advanced pretty far in the process there. There is a surprising lack of information on the fund given its overall influence on the finance world more broadly. Feel free to comment on any of the questions below so we can all get some good information on this fund together:
* What are indicative ranges for total compensation at the associate, senior associate, analyst level? (surprisingly difficult to find this information; though it varies, it would be helpful to know an illustrative number)
* How is Citadel perceived on the street versus (i) "Tiger Cubs" and well-known single-manager platforms (ii) other multi-managers (like Point72, BAM, Millennium) and (ii) roles at elite private equity firms (like Blackstone, KKR)? This is a bit of apples and oranges, but I want to get a sense for perceived selectivity and "prestige" even if others feel that this is the wrong thing to be focused on. Personally, I feel that the broadstrokes perception is Tiger Cubs > Megafund PE >= Citadel > all other multi-managers, but curious to hear what others think.
* When I look at ex-Citadel associates on LinkedIn, I have noticed a striking pattern of them going to work at funds started by senior folks that are ex-Citadel as well. Is it correct to assume that working there makes you successful down a certain path, but that it does narrow your path?
* I also tend to see that ex-Citadel funds tend not to perform anywhere near on par with Citadel, though the folks that leave all tend to be successful career-wise and often become PMs. Do people agree with this?
* I notice many people that work at great PE funds leave to work at Citadel but nobody at Citadel leaves to work at great PE funds. Why is this? Is this because of a perceived skill set deficit of working at Citadel (e.g., that they cannot pick up the dealmaking ability) or is it because the folks at Citadel end up liking their role and don't want to become dealmakers?
* Do you think people at Citadel generally like their lifestyles?
* Generally, most people at hedge funds do not go to business school but, in the event that someone were to be interested in that, I have heard that business schools tend to be biased against people that are "traders" or "short-term" in their investment horizons. How true is this? I have tended to observe strong b-school placement for ex-Citadel people (e.g., top 5 placement is very likely), but in talking to people they usually claim the opposite.
Citadel Global Equities
This was originally posted as a response by @Xaipe" and has been formatted for this post
Just to share some first/second hand (but might not be perfectly accurate) info here.
Used to work at a multi-manager (Millennium/BAM/P72), and my PM back then was ex-Citadel and ex megafund PE.
Also had exp at megafund PE and single manager HF myself so think i could comment a bit.
Citadel Hedge Fund Salary
Pay back then was PM-driven. Depends on which team you are at global equities. Might have changed now.
Your promotion is tied to your performance in the tracking list. So if you don't hit some return you might stuck at sr.asso for a long time.
Citadel Fundamental Strategies
Global equities is market (beta) neutral strategy. So you need to really understand what it means here. High leverage, you might have 70-90 names in the portfolio, almost always short term focus (quarterly trading). Because even if there is no upcoming catalyst, you still have earnings. The tight risk means you can't really take long term view/volatility as much as let's say pershing square. so mostly quarterly trading game. For example, some multi manager might give you 4/8 stopping points, meaning once you lose 4% your portfolio will be cut by half, 8% means OUT. Citadel is looser than that don't worry.
The style decides that you need to care a lot about positioning, balancing etc. Most of the HF trading volume are comprised by these guys.
Citadel Compared to other Funds
I don't get this prestige ranking thing. In HF it's all about return, and citadel is a top notch place. To make apple to apple comparison, you can only compare the Global Equities teams with multi manager platform, which is Millennium, BAM, Point72 etc. These are the similar strategy (market neutral), and similar infrastructure/team structure.
That's why you will see PMs jumping a lot among these places (quick linkedin will show you a lot)
It is easier to be a PM at these places, and normally you have higher cuts too (millennium gives you 20% i think), but obv higher turnover rate.
For tiger cubs. These are old school net long HF (never market neutral). They might take long time to do research and DD for 1-10 ideas in a year, and the holding period is mostly >1 year value play.
Places like Viking have their long only funds too. Most people have PE background because the skill set is more transferable. (like PE style but in public market)
Life here will be more stable, and you also get to share the 2% mgmt fee which you don't at the multi-manager platform, which means even in a down year you will have bonus.
Downside is, it's normally more like PE 2.0, as in you will have VP, director etc above you whereas at Citadel you work with the PM directly. Also at tiger cubs it takes forever to be a PM
For mega fund PE it is not comparable. Although fundamental value guys do hire a lot from PE.
Rarely see people switch from hedge fund to pe because normally after a few years at HF, it is not practical to switch back to the similar level position at PE which requires significant deals experience (imagine 2 years at IBD, 3 years at a hedge fund, you think you can start as a sr asso/vp at PE? very hard).
Also mostly you see PE people switch to HF due to many reasons. However I do see some exceptions of HF --> PE. All at junior level and had previous PE exp.
Lifestyle at Citadel Global Equities
Life style can be tough at Citadel, but not going to be as bad as megafund PE, unless at earnings season.
You tend to get into the office around 7am since you have to trade closely to the market. 11-12 hours work at least which is not easy. Some teams could get worse but for the industry, it's already not bad.
Again it varies by teams
Citadel to Business School
I don't think you can generalize on this. If you are at Citadel, you must be a smart dude from good school with good grades. Then it all comes down to who you are and why mba and your career plan.
I can easily find you HF people getting in to H/S easily, and cases where top HF candidates got bloody rejection.
Take them with a grain of salt. Things may be different now.
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Interested as well.
Same here, Citadel seems like a very promising place to work at
Just to share some first/second hand (but might not be perfectly accurate) info here.
Used to work at a multi-manager (Millennium/BAM/P72), and my PM back then was ex-Citadel and ex megafund PE. Also had exp at megafund PE and single manager HF myself so think i could comment a bit.
Pay back then was PM-driven. Depends on which team you are at global equities. Might have changed now. Your promotion is tied to your performance in the tracking list. So if you don't hit some return you might stuck at sr.asso for a long time.
Global equities is market (beta) neutral strategy. So you need to really understand what it means here. High leverage, you might have 70-90 names in the portfolio, almost always short term focus (quarterly trading). Because even if there is no upcoming catalyst, you still have earnings. The tight risk means you can't really take long term view/volatility as much as let's say pershing square. so mostly quarterly trading game. For example, some multi manager might give you 4/8 stopping points, meaning once you lose 4% your portfolio will be cut by half, 8% means OUT. Citadel is looser than that don't worry.
The style decides that you need to care a lot about positioning, balancing etc. Most of the HF trading volume are comprised by these guys.
It is easier to be a PM at these places, and normally you have higher cuts too (millennium gives you 20% i think), but obv higher turnover rate.
For tiger cubs. These are old school net long HF (never market neutral). They might take long time to do research and DD for 1-10 ideas in a year, and the holding period is mostly >1 year value play. Places like Viking have their long only funds too. Most people have PE background because the skill set is more transferable. (like PE style but in public market)
Life here will be more stable, and you also get to share the 2% mgmt fee which you don't at the multi-manager platform, which means even in a down year you will have bonus.
Downside is, it's normally more like PE 2.0, as in you will have VP, director etc above you whereas at Citadel you work with the PM directly. Also at tiger cubs it takes forever to be a PM
For mega fund PE it is not comparable. Although fundamental value guys do hire a lot from PE. Rarely see people switch from hedge fund to pe because normally after a few years at HF, it is not practical to switch back to the similar level position at PE which requires significant deals experience (imagine 2 years at IBD, 3 years at a hedge fund, you think you can start as a sr asso/vp at PE? very hard).
Also mostly you see PE people switch to HF due to many reasons. However I do see some exceptions of HF --> PE. All at junior level and had previous PE exp.
Life style can be tough at Citadel, but not going to be as bad as megafund PE, unless at earnings season. You tend to get into the office around 7am since you have to trade closely to the market. 11-12 hours work at least which is not easy. Some teams could get worse but for the industry, it's already not bad. Again it varies by teams
B school app - i don't think you can generalize on this. If you are at Citadel, you must be a smart dude from good school with good grades. Then it all comes down to who you are and why mba and your career plan. I can easily find you HF people getting in to H/S easily, and cases where top HF candidates got bloody rejection.
Take them with a grain of salt. Things may be different now.
Thanks for the feedback, Xaipe.
Generally, I lean towards believing its a great role for someone that isn't me, but obviously it is extremely difficult to turn down. A couple of other questions:
1) What happens if I don't like my coverage universe and I want to cover a different set of companies long-term than what I have at Citadel? Like of course they say you can switch, but how realistic is that really? 2) What are the "exit opportunities" if I end up not liking it there? It's a big fear, to be honest, that I won't like it but feel "stuck." Headhunters, probably in their own self interest, have given me rather convincing arguments for why I should believe that people (a) tend not to like it and (b) get stuck in "fast money." How true is this and what are the other opportunities if I leave? 3) Do other people agree that single manager Tiger-cub funds are "Banking 2.0"? I would tend to disagree with this characterization, but if it is true, then I'd be keen to know. 4) If I am concerned about career flexibility because I am, to be perfectly honest, one of those rather annoying Millennials interested in finding the "right fit for me." A lot of me thinks that if I just go work in private equity, especially at an "operationally focused fund" (if that is even real vs. being just marketing) like Bain or Berkshire then maybe I'll have a longer time period to figure out what's really right for me. If I am this type of person that's anxious about specialization, is this the wrong fit for me?
I don't know about Citadel specifically, but I do have experience at a multi-manager. You will probably find it hard to switch within pods at Citadel, simply for political reasons: the portfolio managers won't want to put each other in a position where one lost an analyst and another took him, as it creates awkwardness, and their relationships with each other do matter. That being said, your career is not going to be set by this move. I've seen people switch verticals they go from job to job. The one thing that could be career limiting is going into something very narrow like Energy or, to a lesser extent, Healthcare.
The exit opportunities from any of these places are just fine. I've gotten the same speech from head hunters. They're just trying to advance their own interests here. The reality is, the hedge fund job market remains relatively liquid through your 20s, and if you have a relatively strong "brand name" you'll get your chance at firms across the industry. Citadel, Tiger Cubs, etc. all qualify, and all will get you an interview. Once in the room, you will have to tailor your stock pitches or case study analyses to the firm you're pitching to, however.
Banking 2.0 describes some Tiger Cubs, especially some of the very large ones. Note that I have friends at these funds, but don't work at one, so I'm basing this on second-hand information. Many (but not all) Tiger Cub funds are "up or out," with your first few years there spent doing a ton of modeling and relatively little thinking. Also some will downplay just how common "out" can be in the "up or out" structure. The worst-case-scenario at a Tiger Cub is that you spend 2-3 years doing nothing but modeling and then have to leave to another fund or an MBA. But there are plenty of Tiger Cubs where you'll get more involvement, and getting promoted to senior analyst at one of these places can be a great way to advance your career. Keep in mind, there are definite overlaps in culture at these funds, but they are not really one monolithic culture. For instance, I've heard (again, second hand) that Lone Pine is an incredible place to work, whereas Viking and Tiger Global are really unpleasant. If you get an offer at one of these places, you really need to ask around and find some ex-analysts to speak to you, to get some idea of what you're getting into. There's a lot of variance.
Yes, private equity will be marginally better in keeping more job opportunities open, especially outside the hedge fund industry. But keep in mind that there is no guarantee that you'll get a hedge fund job after a private equity role, and you'll be competing against an increasing number of younger analysts who have public markets experience. Nowadays, you'll see a lot of people recruited to buyside out of college, and 4 years after graduation many of your counterparts will have either 2 years banking + 2 years hedge fund, or even 4 years hedge fund experience. The competition will be that much fiercer. And, as I said, it's really not as though your first hedge fund job sets your career path. I see a lot of moves around across different funds, different styles, etc. Some of the jumps might really surprise you.
oops. Great reply, and good timing. didn't see that. seems that we share the similar views.
What would count as a surprising jump? And what would you count as more usual move in your opinion?
Also the name Markov implies quant which is kinda weird given the above.....
What about for opportunities outside of hedge funds?
Hey - To share my views here for discussion.
But keep in mind it is that PM who will pay for you. Every PM is looking for different thing, experience level, skill-set, trading style etc. Also bear in mind it's a small office compared to IB, you can't just tell the TMT pm that you don't wanna do it anymore all of a sudden and turn to the Consumer PM next to him and say hey let's try it.
To be honest, for these short term market neutral guys, i don't think it differs a lot for the coverage. Similar play just different KPI. The only time I saw people switch is, maybe the PM was let go but the analyst was kept so he has to join another team. But don't worry most of quick money guys are not that nice - millennium will kick you out right away. :)
If you are solid, not a problem at all. Linkedin will show you many many examples. Plus i think it is very good to learn about the short-term mkt behaviors too. Everyone can do long term investment, but lots of long term guys don't understand the short/mid term dynamics which i found them super helpful, especially for a PM role on trading, balancing, timing, positioning, hedging, cost structure etc.
I didn't say it's banking 2.0. It is not. I said PE 2.0. personal opinion PE: tough hours but better than banking, investing role, long term focus, more structuring work, hierarchical Long term HF: could be tough hours but generally better than PE, investing role, less structuring/ppt work, could be hierarchical. The skillset on deep value analysis you obtain from PE is very transaferrable to Activist/Tiger cubs. Basically you do the same thing in the public markets with more pure investing work and less PE type transaction work (LOI/NDA/Financing/ppt etc).
Don't think anyone can answer this but yourself. It depends on your personality, personal development plan, skills set, career goal etc. I will suggest you think about what elements you will wanna see at work, what you are good at, and what you are interesting in.
If you are really risk averse, choose PE first. it is long term illiquid investing, super risk averse, longer time frame, great exit opp, great skillset and a manageable life style.
Hope these help.
Thanks Xaipe and Markov.
Some follow up questions for you guys:
Hi -
My advice to you is to really think about your career for long term instead of viewing jobs as pure stepping stones. At Citadel you work with a PM directly, and if you do well after 4 years, opportunity A is: you manage a $300m book by yourself as a PM doing the same things and have 20% cut; Opportunity B is: join a tiger cub fund as sr asso/vp, doing something a bit different and working for senior partners with no p&l and only discretionary bonus.
Would you go to the tiger cub?
You can see it's really a personal choice here. My point here is there are a lot of factors to consider when choosing a fund and they vary a lot as time passes. No formula and generalization here I could provide you. Eventually you will build your own investment strategy, philosophy and risk management skills. You are choosing a life style and a long term career instead of a tag like Tiger Cubs.
I don't care whether you agree or not; i am just here to provide first hand info. Feel free to say no, but not going to be my problem.
Brand name matters without a doubt. but your marketability ultimately comes down to your track record. If you do well and quickly become a partner at that fund with a somewhat famous PM, not a bad deal isn't it?
Hope it helps.
Fantastic thread.
One question for those of you at a fund now: When making hiring decisions, what do you guys think of people who started their careers at a long, value investing Asset Management fund and then studied at a top business school (HWS)? How does the candidate compare to someone coming out of top IB or top PE and what can this person do to better position themselves for a long/short or activist fund?
I think it'd be a great idea (although the pay might not be that good for entry roles...); you will learn the real investing from real money.
My buddy from fidelity after IBD literally received interviews from every hf that was hiring (l/s, multi-strat). He eventually went to a (then) top multi-strat special sits fund
From what i see, pure activist funds still hire mostly from IBD/PE. I have seen people from equity research to activist but really rare.
Great thread. Would like to tag on a question here: for those that have done the 2+2 banking/PE route and are looking to move to a hedge fund, is there a "better" option between multimanager and single manager L/S to start one's public investing career (taking a longer term view)? I've heard that single managers may have more resources (time, personnel, etc.) to train junior folks whereas a multimanager may be more quarter to quarter focused and therefore less inclined to teach you how to be a good investor. That said, know it all varies by firm/team/PM.
Hi iamfromcanada,
you are right. I have seen both. However just want to highlight that there is a difference between multi-manager (och-ziff/viking) and multi-manager platform (BAM/MLP/P72) so that we are on the same page...i think here you mean the platform vs. non platform? Single manager will be like Pershing Square or Paulson. Correct me if i am wrong.
Funds like vikings/glenview hire a lot from PE and they are more hierarchical and larger team, while platforms want you to be like a USB.
My PERSONAL opinion is the longer term guys. You will find the environment more familiar and the way you conduct research on companies are more relevant to your PE exp. Unless you really want to try Q trading (quicker route to PM)
By the way, I decided to turn it down. Extremely tough decision but it's what I felt was right. I genuinely appreciate all of your feedback. It's mainly that it was in a non-NYC location that drove the decision. You guys did help convince me of the merits of a MM platform - probably would have taken if it was in NYC.
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