Curious About Hedge Fund Track
Hi Monkeys,
I will be an Investment Banking Summer Analyst at BX/LAZ/HLHZ this summer in the Restructuring group. After my 2 years as an Analyst, I would pursue a career at a top distressed debt hedge fund and then move onto completing an MBA program at an MBA business schools">M7 school.
I was curious if any other bankers followed that path and where they ended up (ie HF's, MBA, post-MBA). Furthermore, I have read a few threads on WSO but have not been able to source expected compensation. For a top HF (ie Oaktree, Canyon, etc.) with >$5b, if I came in after my 2 years, what would the typical analyst expect to clear for Year 3 and Year 4?
Lastly, jumping back to the MBA, I was curious about how strong placement into top MBA programs (ie Harvard, Wharton, Columbia, Stanford) have been from the top HF's where you typically see a BX/LAZ/HLHZ banker work.
Thanks guys!
I think all of these firms are great and you will be fine at any.
Joining a new hedge fund -- fast track potential or career suicide? (Originally Posted: 02/08/2010)
how do you evaluate choosing between a top BB offer versus an offer for a newly started special sits/ distressed hedge fund? both are full-time positions in new york. the hedge fund is run by someone who used to be a top lieutenant at a major credit fund (centerbridge, silver point, Farallon, oaktree, etc.) and has a strong investor base. if the buy-side is the ultimate goal anyway, does it make sense to take the HF gig even though it's a fairly binary decision? or do you go with the safer, more structured BB offer?
fyi, i have offers for neither - just curious to see what the logic is in thinking through this decision.
I say you go hedge fund. If the guy is as proven, and the investors as reputable as you say, it sounds like a great shot to make a name for yourself while you're young. Take it and bust your ass. If the thing totally implodes, at least you'll have earned a reputation with the team as a go-getter, and they'll be able to help network you in to another position. If it takes off, well, you'll know you made the right call.
Don't listen to johnsnow2013. He clearly doesn't work in the industry. First, it's PJT now not BX and talking to friends across the street it's not attracting the same quality talent as before (as evidenced by people rejecting their offers for other IBs for both M&A and RX). I also expect PJT to lose some market share to Lazard (for debtor side transactions) as a result of the brand dilution. I've explained this in other threads so feel free to look it up.
HL is most definitely in the same category as Lazard and PJT. I would put Lazard and Houlihan Lokey as the top tier RX IBs. To say that HL is not in same category is ludicrous and proof that you don't work in the restructuring industry. If you worked in RX, you'd realize exactly how much clout and respect HL has. I mean it really is amazing how dominant of a reputation they've built for themselves in the RX market.
If you want to work in anything distressed (PE, HF, Credit, RE) HL/LAZ will provide similar opportunities at the top funds without a doubt. I'm uncertain about PJT because of the drop off in talent but positive that an analyst stint there will still be favorably viewed and can get you opps at top funds. If you are at any of the three you will get plenty of HH reaching out to you. HL also has excellent relationships with all of the top funds so you can easily have an MD make a phone call for you as well.
To get into HBS, Wharton, Stanford GSB, CBS, I'm more than positive that a HL/LAZ/PJT RX gig + a stint at a top fund will give you the profile to be competitive. However in RX, it's usually the other way around. You see MBAs from those schools trying to break in. When I lateraled from my BB M&A group to RX, I interviewed with a bunch of shops and a lot of the people I interviewed with had their JD/MBAs or MBAs stamped from those top schools and are coming from the IB + PE + Top MBA track. I personally made the switch a year into my BB M&A position so I wouldn't have to start over on the sell-side after an MBA.
For Comp at those top funds, you'd be making anywhere from $275k - $375k all in depending on the fund, your performance, and the fund performance. Congrats on the offer, all three of these RX groups have a reputation of being incredibly difficult to break in. Can't go wrong with any one of them.
I'm at an RX shop just below HL/LAZ/PJT so I have nothing to gain from touting any of the three. Just bewildered at the ignorant claims from college students or people who haven't' spent one day working in the space being made with respect to the RX industry.
HF would have to be truly exceptional for this to be worth it. most HF are not going to give junior ppl any responsibility. going the generic BB route much better risk/return.
Hey Tim,
I appreciate all of the information. I respect your opinion and it sounds like you know what you are talking about.
Thank you for answering each of my questions. Your response is one of the best I have seen on this subject on WSO.
Thanks, cheers, and happy holidays.
"you know nothing, johnsnow2013"
I said I expect PJT to lose some market share but we will see. They are still obviously a top RX group.
Moelis has been doing making some amazing strides in the RX space in the past couple of years. Yes, Moelis is a great RX shop but when you think of the best it's usually Laz/HL/BX. Moelis is definitely getting there however. From the viewpoint of funds trying to hire these guys it's usually BX/HL/Laz/Moelis guys that are in demand. But you're right Moelis is a great for RX work. Btw HL is not "extremely" creditor focused. That was their bread and butter, but It seems like they are 50-50 nowadays (at least that's what they claimed when I interviewed there). Personally I think working on creditor-side mandates are more interesting. You are looking at things from investment analysts perspective at a fund and get to work on more deals.
ConradPaul I don't think the quality LAZ/BX guys are superior to HL guys at all. There are BX guys that move over to HL and vice-versa. I've also seen some analysts w/ offers at great places like GS, MS, Moelis LA, EVR, GHL, Centerview, LAZ turn down their offers for HL RX. I honestly think HL is the best mix of quality RX shop, culture, & exits and I wish I had gotten an offer there.
if the hedge fund gave u responsibilities, the hedge fund will have worse long-term returns than a ponzi scheme.
Why go back to B school?
I can only speak to equity L/S shops and believe it is pretty consistent across strategies but you typically don't go back to b-school if you work at one of the hedge funds you described unless you are fired or are looking for a career change. If you're really just looking to stay at a HF, it doesn't make sense to go back because of the huge opportunity cost. In addition because it is a eat what you kill environment, you have the added opportunity cost of learning experience, advancement, building a track record, etc.
But to answer your question, I'm sure placement is very strong. I wouldn't worry about it.
Take the BB offer I'm in total agreement with MarginCalling, it's all about risk/return. If the fund does well, you can always try to come back to it in the future after you've finished your analyst stint (if you get placed into something along the lines of leveraged finance.)
Thanks Jack!
Great question. Given what you said about buy-side being the ultimate goal, I would take the HF offer. The first point I would make is that way, way too many people on this board act as if it is a given you will get HF offers after an IB analyst stint. Sure it happens, and was more common in good times, but it's not nearly the certainty that some tend to believe. IB is a tough gig, and if you're already thinking about quitting and going to the buy-side you will have a difficult time.
The other point is that if the HF founder really does have a great resume and background, then you're in good shape. If this was just some dude that was starting a fund then I would probably advise you to take the IB gig. But since this guy is established and was a top guy at a big fund, he has the credibility you should be looking for.
All in all, since you know you want to be on the buy-side and the founder has big-time experience, I would start at a a HF now instead of putting it off on the hope that another offer comes around a few years later.
I think most people would agree that the talent level of analysts at LAX/PJT has been superior to HLHZ (not that HLHZ is bad).
PJT talent probably won't be as good as before, but for now kids there are given benefit of the doubt since there's still some BX association.
As for LAZ, you'd get the looks. Rx kids there do well, but it's annoying that they don't place you immediately.
I would take the HF offer in a heartbeat. It's an opportunity to be on the buyside, get a lot of responsibility quickly and establish yourself. If the fund blows up, you could leverage your experience into another HF gig, and I think that many banks would still be willing to take a look as well. Plus it would be
I imagine that someone who goes to the BB in this scenario would forever be wondering "what if".
Worked at a BB and jumped to a special sits fund 2 years after. Though this is in Asia I had 1yr of experience at a BB in the US
Heard great things about BX and LAZ - you will get the look assuming your other credentials fall in line
Another word of advice is NOT to lay out a 5-7 year plan and stick to it no matter what. Before entering banking I wasn't even sure I wanted to jump to the Buyside and I was dead set on an MBA. After banking and now at a HF, I feel that an MBA is redundant (especially if you are on a career track) - Circumstances CHANGE and you should learn to change with them
You have to take some chances in life if you want to become something.
I saw this thread on the frist page and wanted to respond. I go to a top target and picked HL RX over GHL and MS and have a friend who picked it over Moelis LA, LAZ, & EVR and a kid in my frat who picked it over some other BBs.
There is some truth to what Tim is saying. I talked to a bunch of alums and others before making my choice and they encouraged and agreed with my decision to go with Houlihan. All the people that went there (from my school at least) ended up at most of the funds that I want to be at and I loved the culture so it was the most logical choice. A surprising number of PMs at some of these funds are former HL RX guys as well so that's bound to help.
Regarding PJT, it's top RX shop for sure so if Tim is saying it's not I disagree. However, he's right in that there is a lot of uncertainty shrouding it. On campus this year some people did opt for other shops when given an offer. I don't know what this means and I don't care but nonetheless it's still a top shop.
ttim111 has actually been very helpful and has provided some of these threads with great info
HL rx is a good shop. Gonna learn a ton. I 98% think Moelis LA evr LAZ might've been better opps, but if you're a top analyst there you're gonna learn a lot and get looks.
Honestly a lot of it boils down to personal intellectual capacity. If you show at any of these places that you're the top analyst (or one of), you will get the looks. It's just a matter of positioning yourself best, and I think evr/LAZ/PJT do it more so than HL. Going over MS probably not a bad call if you want the distressed exposure.
Well he summered at Moelis LA and then leveraged his offer to get HL RX so I think he knew what he was doing. I feel like you might not be familiar with the kind of opportunities you can get coming out of HL RX. I've spoken to a lot of people about it when I was making my decision so I have a very good idea.
Tim pretty much hit the nail on the head about the benefits of working on the creditor side. Even people from lower tier creditor-focused RX shops have been able to jump to top funds like (silver point, Perry Capital, etc.) just because of the impressions and relationships you could make when working on deals. HL's historic rep as the best creditor-side RX shop and all the relationships that breeds is one the reasons their analysts place unbelievably well.
They also don't have a huge analyst classes like EVR, Moelis LA, & LAZ so there is less competition for exits. Do you really think all the kazillion analysts at EVR or LAZ, for example are going to get PE / HF exits? No way. HL keeps their RX analyst classes small. GHL does the exact thing and keeps their analyst class small and all their analysts place well too. This is why, for M&A, if you the option between GHL, EVR, and LAZ for example you would be better served going with GHL because you have a higher likelihood of placing on the buyside. Most people in this site would tell you to take LAZ or EVR because it's more "prestigious" but GHL would actually be the better pick.
A couple things here:
1) I work in distressed credit and think you will get looks from HHs at all of these places - will matter more what you do with the interviews.
2) to your question about what most people do, they mostly stay in the industry and don't get an MBA. MBA is not worth it if you are happy where you are (don't want to open this can of worms, take my 2c or leave it). Guys I know who left similar positions for the MBA either realized they wanted to do something totally different or wanted to lateral to a shop with a better culture / in a different city and used it to do so.
3) if you are set on the MBA, chances are you have the stats and work exp to get in. After that it's about crushing your essays and convincing the adcoms you actually want/need one (which isn't the easiest thing to do given what you want to do, but obviously feasible).
4) Bigger picture, clearly you are getting ahead of yourself. What you need to do is read up on what you'll be doing this summer to crush it and get an offer. You will learn far more about what you want to do over those 10 weeks than from what anyone on here is going to say. After you get the offer, take the GMAT to keep your options open. Then you start full time and figure it out from there, or if you decide you hate it this summer, start from square one.
Full disclosure: started on buy side credit, did the MBA apps as a backup and got into two of the schools you mention. Heavily considered it but decided to pass on it after finding a spot at a dream firm in the city I was looking to switch to.
I'd take the HF spot. I'm praying for an opportunity like that while I'm still (relatively) young and adventurous.
Thank you BeastMode. Excellent insight and advice.
Happy holidays.
I'd listen to BeastMode and Tim. They seem to know what they are talking about. All three are unreal places to start off out of undergrad.
I have a very close friend at HL and I know that It is incredibly hard to get an offer there and know that their placement is off the charts. They are very picky and their interviews are much tougher than most other shop's interviews. Why do I say that? Because there are kids from my school who got offers at places like JPM and EVR but couldn't convert their HL RX interviews. ConradPaul to say they were the least impressive is absurd given that it is no joke to land an offer there. You must be a freshman or sophomore in college to be making a claim like that.
Anyby, do you go to Stern? There were a couple of kids with offers at PJT here as well that opted to take other banks. They made around five offers here b/w M&A and RX and I think only two took them.
i have a question.
if you take a buyside job straight outta school, (e.g. special sits/distressed hf), will that mean you'll get pigeonholed
e.g. if you wanted to leave for another type of hf, will they just see you as a special sits/distressed guy?
No, I go to Wharton and yea it was a similar story with PJT at Penn too
"idk having worked with analysts at most rx shops, HL i found least impressive."
Do I sound like a freshman or sophomore in college?
Quod cum in ea eaque ullam aut dolor. Ipsam omnis at atque in illo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Est iusto dolorem temporibus. Minus rem est quia aut explicabo sequi non. Sequi quis incidunt ea. Vitae consequatur et nulla.
Vitae sint vitae ut laboriosam dolore quisquam. Aperiam quo eveniet alias nostrum voluptatum rerum quisquam. Molestiae deleniti qui dolores et quasi.