7/6/12

There have been several of these so I don't know how helpful I can be. Will do my best

Took a pretty traditional route to get the job:

  • Target school
  • Top banking group
  • HF job through headhunter

Not going to give out too many personal details, but I'm sure people could figure out who I am based on my posting history if they really cared/tried. Anyway... I work at a $10b+ L/S fund. I "cover" several industries (co-coverage with a few senior analysts) and while I typically stick to fundamental L/S, I've done some event-driven and credit/distressed investing.

Ask me any questions about banking, HFs, the interview process, the actual job, etc. Try to keep questions public unless it's extremely personal - best for everyone to see so that I can avoid repeats and help everyone at once

Answering these somewhat slowly because I'm pretty busy these days, but I will do my best to get to all of your questions and provide as helpful an answer as I can.

Comments (142)

5/28/12

What exactly do you do on the job? Do you see yourself continuing in that role? Where do you want to go from here?

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Best Response
5/28/12

What exactly do you do on the job?

Big picture? I am tasked with finding compelling longs and shorts (primarily equities, but can use credit, derivatives, etc--whatever is best for the situation) and then try to convince senior analysts or portfolio managers to put on positions.

In more detail:

When I first started, I was typically told which companies to look at. I had to learn them inside out, assess them as investments, put together a short writeup, then discuss with whoever gave me the task. As I've developed over the last year, I spend significantly more time working on my own ideas and then pitching them as I see fit. I'll usually run my stuff through the senior analysts to get advice, but I now typically work directly with the PMs, versus before where my thoughts were typically vetted before getting to the top guys.

How do I learn about a company?

I like to learn a company's history, so I'll typically read through the following:

-2-3 10-Ks
-several Qs
-minimum of 3-4 earnings call transcripts, but typically more
-event transcripts (conference presentations, etc)
-important 8-Ks and other documents
-Street research
-Speak with analysts (this is typically to get objective info about the company and NOT to get their opinions--there are very few sell-side analysts whose opinions we give any weight)
-Industry experts, consultants, etc
-Management or, at minimum, investor relations

Thinking about a company as an investment:

This is the hard part and why some guys get paid big money. If I had to boil it down to one word, it would have to be "edge." That could mean a variety of things. Because I'd like to keep my career going, I focus exclusively on the legal. In simple terms, "edge" basically implies that your research has led you to have a divergent view.

Maybe you disagree with the logic of a story. Maybe you think the Street is misinterpreting information or perhaps assigning too much or too little weight to the wrong things. Maybe they're modeling things incorrectly. Maybe you understand a technology better. Maybe you think a trend will play out differently. Maybe you think everyone is missing something crucial. I could go on and on. Basically, when you go to a PM, you want to tell him you have a heavily researched and well-supported divergent thesis.

On top of that, ideally you also have a catalyst, or several. Perhaps you have a great long idea, but it wouldn't be particularly beneficial for your job security if you convinced your PM to catch a falling knife (stock with a precipitous fall in price) without having a strong, well-supported view of when the price would turn around. The "ideal" investment is a good business, at a good price, with something that will cause a convergence between your view and the Street view. This could be anything from hard catalysts like a merger, reorganization, etc, or something softer like strong earnings, company/industry tailwinds, etc.

The reason catalysts are important is that most hedge funds are concerned with business continuity. We want to continue collecting that 2%. Most capital isn't committed for extensive periods of time, so we need to show strong performance on a yearly, quarterly, or even monthly basis. We're a large fund so we have the benefit of the doubt from investors, given the extensive track record we offer, but smaller funds don't have that luxury.

Do you see yourself continuing in that role?

Absolutely. I love what I do and I still have plenty to learn. I have no plans of changing companies or roles any time in the near future.

Where do you want to go from here?

To be honest, I don't know. Maybe I'll be an analyst for a long time or maybe I'll eventually make PM. I know kids on WSO interested in HFs masturbate over the thought of being a PM, but it's not for everyone. There's a clear distinction between the skillset of a PM and an analyst.

For example, David Einhorn (Greenlight) and Bill Ackman (Pershing Square) are much more like analysts than PMs. Their funds are built to make focused investments on stocks and they do not build highly diversified portfolios like some other funds.

Steve Cohen, on the other hand, is a PM. He spends his time managing his stable of PMs and also the overall exposures of his fund. He doesn't spend much time getting dirty with specific company details.

A PM focuses on the big picture and doesn't do much work on individual names. He makes money by picking the right themes. An analyst gets deep on companies and industries and makes money on their bottoms-up, stock-specific analysis more than anything else (themes are important too, of course).

How relevant did you find your banking experience in this hedge fund role?

I'd say banking was helpful in the sense that I became a speedy gonzalez on excel, I could model, and I knew my way around a company's financial statements. Beyond that, there was very little carry-over. My banking experience (and I'd imagine pretty much everyone else's) didn't teach me to think critically. I simply took assumptions from the company or my seniors and plugged them in. At a HF, no one cares if I can build a model with a million sensitivities if the outputs have no real meaning. I'm paid to think critically and provide meaningful work/analysis, not to spit out a million pages. For example, I have NEVER put together a writeup longer than 5 pages. They're typically 1-3 pages, actually. I'll get the big picture on paper, then discuss in person. My team doesn't care about the quantity of work I produce, as long as something has been well-researched and I have supporting research/logic for my arguments.

What was the interview process like?

Pretty intense. I had a case study after the first round and had to meet with every single investment professional. You had the good cops and the bad cops. Had to show that I was smart and had a strong passion for investing. I'd sum it up as follows:

-are you a top analyst?
-does talking/thinking about stocks get you hard?
-if yes, why does it get you hard?
-has this been something that's gotten you hard for a long time?
-you don't swing both ways, do you? no, you'd better not... HFs only. fuck PE
-pitch me a stock and don't sound retarded when you do it
-case questions
-ask me some questions to fill the remainder of the interview

5/28/12

What percentage of your salary does the headhunter take and for how long?

Too late for second-guessing Too late to go back to sleep.

5/28/12
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

5/28/12
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

Too late for second-guessing Too late to go back to sleep.

5/28/12
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

Are you trying to become a headhunter? If not, why do you care? You do realize the money is paid by the company and not the employee who was hired, right?

5/28/12
optimus_prime:
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

Are you trying to become a headhunter? If not, why do you care? You do realize the money is paid by the company and not the employee who was hired, right?

And what difference does it make whether the money is paid by the hedge fund to the head hunter directly or through the OP?

Too late for second-guessing Too late to go back to sleep.

5/28/12
brandon st randy:
optimus_prime:
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

Are you trying to become a headhunter? If not, why do you care? You do realize the money is paid by the company and not the employee who was hired, right?

And what difference does it make whether the money is paid by the hedge fund to the head hunter directly or through the OP?

About $20,000 worth of difference

5/28/12
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

it's only for the first year

5/29/12
turtles:
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

it's only for the first year

I see. Many Thanks for the info. At 25% of salary for 1 year the headhunter is basically asking for 3 months of you salary, sort of like how apartment brokers in NYC take a broker fee equivalent to your one month rent(or more).

I haven't need to use a headhunter but this is definitely something worth bearing in mind.

Too late for second-guessing Too late to go back to sleep.

5/29/12
brandon st randy:
turtles:
brandon st randy:
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Thanks. For how long do they take a share of your salaries? The first year (after the several months initial period)/2 years?

it's only for the first year

I see. Many Thanks for the info. At 25% of salary for 1 year the headhunter is basically asking for 3 months of you salary, sort of like how apartment brokers in NYC take a broker fee equivalent to your one month rent(or more).

I haven't need to use a headhunter but this is definitely something worth bearing in mind.

Not exactly. The money to the headhunter is not coming out of your paycheck unless of course you were to have hired them directly, which is quite rare. Most large companies have internal recruiters or outsource recruiting to third party search firms. The 25% is a separate check paid for by your employer or the search firm that contacted you and you still get 100% of your base salary. Two different things. So if a headhunter was used and your 1st yr base is 100k, you get the full 100k and the headhunter gets a separate check for 25k.

5/29/12
turtles:
brandon st randy:

What percentage of your salary does the headhunter take and for how long?

It's usually around 25% of the base salary but the employee has to be with the company for several months before the headhunter gets a dime

Can't confirm/deny the number, but the HH is paid by your employer, not by you. You are not affected by this.

5/28/12

How relevant did you find your banking experience in this hedge fund role?
What was the interview process like?

5/28/12

I'm currently an undergrad Mathematics/Economics major at a university on the west coast. After doing a 10 week internship during school at a top MM investment bank, I realized banking isn't for me and I really don't enjoy the work. Good learning experience and all, but I am honestly much more passionate about investing and the analytical aspect of it (as opposed to the raw stamina job that is IBD).

I was wondering what your thoughts are on getting into HF directly from undergrad, because I know that is where I want to be. How would you go about getting in straight from undergrad? I know you're more traditional route, but any advice for a prospective non-traditional route is appreciated.

In addition to that, would you mind walking us through a typical work day for you? Also, what have you learned after a year that you had wished someone told you when you first started?

Thanks man.

5/31/12
sofa king smooth:

I'm currently an undergrad Mathematics/Economics major at a university on the west coast. After doing a 10 week internship during school at a top MM investment bank, I realized banking isn't for me and I really don't enjoy the work. Good learning experience and all, but I am honestly much more passionate about investing and the analytical aspect of it (as opposed to the raw stamina job that is IBD).

I was wondering what your thoughts are on getting into HF directly from undergrad, because I know that is where I want to be. How would you go about getting in straight from undergrad? I know you're more traditional route, but any advice for a prospective non-traditional route is appreciated.

If you can get into a respectable hedge fund, go for it. However, unless your family is extremely well-connected or you're ridiculously talented, your chances are pretty awful.

  1. Only a select few consider kids fresh out of school (I can only think of Bridgewater, Jane Street, and DE Shaw off the top of my head, and the latter two primarily look for quantitative backgrounds, so you're probably shit out of luck there). I'm sure there are some other good ones that I'm unaware of.
  2. You (I'm referring to new grads generally, not you specifically) know very little and are a huge time sink. Your finance and accounting knowledge is okay at best. You're slow and inefficient on excel. Your modeling needs work. You haven't seen how finance works outside of academia. No matter how many finance classes you took, you lack fluency and comfort with company filings that one only develops with extensive time and practice (ie, lovely late nights doing bs work at the office). Your employer would have to take you by the hand and teach you things they find to be extremely basic and rudimentary. Unless you're some investing prodigy or a family friend/client, why would any grown man sink so much time and effort into you, AND compensate you well?

Did I hate banking? Absolutely. If I could go back and do it again, would I? Absolutely. It helped smooth my rough edges and get me as ready as possible for my HF job. Despite that, I still felt like I was in way over my head for the first few months. The few other guys I know at HFs all felt the same way. It's not an easy job and if banking analysts find it tough, a kid fresh out of school is going to find it near-impossible. But... if you can get into a solid place right out of school and succeed there, kudos to you. I mean it. It's not something I was capable of doing.

What about small places? Maybe you get lucky and join with the next hedge fund superstar. However, you have a better chance of losing your job a few months in when your boss shuts down the fund. Business continuity is a big question mark for new funds, no matter who the founder is. Furthermore, you're basically betting your early career on a guy you don't know. Finally, as Groucho Marx said, "I don't care to belong to any club that will have me as a member." Go back to #2: be skeptical of any place that is desperate enough to hire you. Mind you, I'm not insulting you in any way--I'm simply saying that you're most likely not that special. I wasn't at your age and none of my friends were either. But hell, maybe you are.

And complaining about a 10 week internship? Come on dude. I have a buddy who graduated from BUD/S (Navy SEAL training) and I didn't hear a peep from him. You're sitting in an office doing mindless shit for many hours a day, but it's a cushy job that pays well, and you'd only have to do it for 1-2 years of your life. If you don't think you're cut out for banking, you're sure as hell not cut out for success in hedge funds. And speaking of the SEALs, they start you off with running, situps, etc--the most basic of shit. Once you've been conditioned, they move you on. Your career is the same. You're not going to start off doing the cool stuff. You have to be a bitch for a while before you move on up. If you have a problem with it, go start your own business and hire people to do the shitty stuff for you.

In addition to that, would you mind walking us through a typical work day for you?

An idea will typically take me a few weeks to flesh out. Basically, what I do is read, talk to people, interpret my research, slap it into excel, put together a short writeup (2-3 pages), send it to relevant parties, and try to get a time to sit down and talk over it. Even if they don't like it, they'll sit down with me and give me feedback. Watch out for any place that doesn't do that - it makes it significantly more difficult to develop.

I typically get in around 7:15-7:30 and the mornings typically consist of reading general news and catching up on anything new that may have been released on the companies I'm closer to. If there's anything news-worthy regarding a position in the portfolio, I'll pass a short e-mail on to a PM. I do this even if it won't result in a big move - best to be safe and keep the senior guys informed. If it is something major, I'll put together some back of the envelope analysis (say, a merger is happening, I'd run a quick accretion/dilution) and try to sit down with the PM by 8:30/9. This job is very different from banking in that formatting and amount of content don't matter. They don't want to see my work, they just want the answer. I don't send long e-mails explaining my rationale. Hell, I rarely write in full sentences. I simply get the numbers ready, maybe include a few bullets, and we talk it over in person. No reason to waste time on bureaucracy.

The rest of the day is simply spent working on ideas. That basically means that I read extensively and spend plenty of time talking to various people, such as company execs, investor relations, sellside and buyside analysts, industry experts, consultants, and anyone else that might be helpful. I'll model, sure, but after you've built out your initial model, you don't need to spend all that much time in excel. The assumptions are what matter at the end of the day and to predict those with any accuracy you have to have an understanding of the business and its industry. After all the research that I do, there's still the challenge of synthesizing it all into a cohesive message. The right conclusion can sometimes be very difficult to find.

I'll leave around 8 or 9. No one is telling me to work on the weekends, but I'll typically spend time reading anyway. I enjoy what I do and want to be good at it. That's not going to happen working the minimum necessary.

Also, what have you learned after a year that you had wished someone told you when you first started?

Thanks man.

Don't be afraid of asking questions. My HF is the first time I've found myself in an environment where, thus far, I've been impressed by everyone's intellect. Definitely didn't feel that way in banking, particularly with certain associates. Anyway, I was terrified of appearing stupid in front of people I respected, so I wasted a large portion of my own time figuring out the answers, when I could easily have saved myself the trouble. Plus, HF guys appreciate curiosity - definitely a positive trait to have.

5/28/12

Great post and thanks for taking on our questions. Have a few for you...

When you mean 'banking' do you mean IBD or Trading? Or another division?

You mentioned you cover several industries. If you worked in an IBD coverage group or traded specific securities, is it easy to move over to 'several industries' because you knowledge is limited? If you worked in ECM/DCM/M&A, how do you know if you're a 'top analyst'?

Do you prefer the HF environment, culture, working hours etc to banking? What are you working hours like now vs banking?
Do you get paid better? :D Can you provide estimate figures of the salaries earned? (I'm assuming this will be base but feel free to include any other figures)

You mention you love your new role. What do you specifically love about it? What type of person is best suited to this work?

And the same questions as sofa king smooth - not really into IBD anymore although I haven't worked at a BB but I'm not convinced its much different...

Thanks!

5/31/12
Charles-perry:

Great post and thanks for taking on our questions. Have a few for you...

When you mean 'banking' do you mean IBD or Trading? Or another division?

You mentioned you cover several industries. If you worked in an IBD coverage group or traded specific securities, is it easy to move over to 'several industries' because you knowledge is limited? If you worked in ECM/DCM/M&A, how do you know if you're a 'top analyst'?

I was in investment banking. S&T guys don't get hired for analyst jobs unless they were in a prop group that focused on fundamental investing (GS SSG or GSPS, for example). The former S&T guys at my fund are execution traders for the most part. They basically monitor our portfolio throughout the day, inform the PMs of anything meaningful happening, and execute trades from the PMs at the best prices possible. There is one guy who has a small prop book, but that's rare to see.

HFs typically don't care too much about your industry expertise because, to be frank, you don't really have any coming out of banking.

Covering several industries is definitely more challenging, regardless of your background, but it often turns out to be better for your career in the long run. You retain optionality over time, you spot themes across spaces, you're better suited to be a PM, and you get diversification so you can shift your focus over time as industries change in attractiveness.

You get official reviews and general feedback from your superiors indicating where you rank.

Do you prefer the HF environment, culture, working hours etc to banking? What are you working hours like now vs banking?

Do you get paid better? :D Can you provide estimate figures of the salaries earned? (I'm assuming this will be base but feel free to include any other figures)

I probably work 70-75 hours a week now vs. ~low 80s in banking. It was actually difficult to adjust from banking because I have to actually work the vast majority of my time in the office and the stuff that I'm doing requires significantly more concentration.

Talked about comp before. Not giving mine specifically, but expect 300ish for a first year analyst.

You mention you love your new role. What do you specifically love about it? What type of person is best suited to this work?

And the same questions as sofa king smooth - not really into IBD anymore although I haven't worked at a BB but I'm not convinced its much different...

Thanks!

Always had an interest in the markets. I like constantly having to learn and adapt to survive. I like competing. I like that I only have to do work that has a purpose. I like the minimal presence of bureaucracy. I like being challenged. I like the meritocratic nature of the job. Probably more to it, but that's the gist of it.

Answered the IB thing above.

5/28/12

Out for the day. Will answer questions later tonight

5/28/12

Thanks for your post.

A few more questions:

Did you finish your two years in IB or leave early for HF?

What are your thoughts on 2 years of PE after IB then moving to a HF?

Any thoughts on being a generalist versus a specialist? Would you choose a less "prestigious" fund for the ability to be a generalist?

5/29/12

Did you finish your two years in IB or leave early for HF?

Would rather not say.

Megafunds will typically have you finish 2 years because they have a better view on employment needs 1+ years out (you'll begin interviewing ~9 months into the job, give or take). On the other hand, smaller funds are more biased toward immediate or summer start (summer after first year).

What are your thoughts on 2 years of PE after IB then moving to a HF?

HF recruiting is brutal. I know people nearing the end of their 2 years and still don't have a job lined up. Others spend 6+ months on grueling process after grueling process. It drags out and there are no guarantees. The PE process, on the other hand, is quick and relatively painless. It's easier. If you run through it from a good group and have reasonable interviewing skills, you will most likely end up with something decent, at minimum.

The PE route is safer. You will have an easier time interviewing during your banking stint and will be more competitive coming out of 2 IB+2 PE. However, you've also thrown another 2 years of your life out the window doing minimally compatible work. There is no guarantee that you'll end up covering the same industry or even the same geography. You'll be a modeling beast, but as I said earlier, that doesn't impress anyone. Large cap PE=processing. You're still not paid to think. My opinion? Ditch the extra step and go to a HF straight out if you can. Keep this in mind, however: HFs are not like PE where you can be wishy-washy about what you want to do. HFs want people who can't imagine doing anything else. You become a real live grown-up on the job, vs. PE where there's still a significant amount of spoon-feeding. If you're not absolutely sure you want to go to a HF, don't.

Any thoughts on being a generalist versus a specialist? Would you choose a less "prestigious" fund for the ability to be a generalist?

The ideal is to stay a generalist as long as possible. You'll have more work and I'd argue that it's more difficult, but as you progress through your career, knowing multiple industries will allow you to see things in a new light/connect the dots differently. Furthermore, you get some diversification. Few people enjoyed being financials analysts last year.

Prestige vs. generalist trade-off? Too reductive a question. Can't make a decision that way. My main piece of advice would be to avoid highly specialized industries unless you love them (biotech, utilities, etc). Beyond that, look for a good cultural fit and an investment style you want to learn. Greenlight is extremely prestigious and I'd LOVE to work there based on my experiences with them (extremely sharp, deep thinking, truly know companies inside out), but I have friends who'd rather work at a Millenium or SAC (more trading-oriented). Different strokes for different folks.

There's no prestige ladder in HFs like there is in IB. I'd struggle to find a reasonable consensus for "top 3 HFs in NY," whereas with IB it'd be almost unanimous which 3 BBs deserve a spot. Furthermore, some of the better-known names are not the best places to go to develop as an analyst. There are amazing shops out there that hire analysts out of banking simply to continue squeezing as much work out of them as possible. You have a great name on your resume, sure, but your buddy Bob at HF XYZ if learning a hell of a lot more and developing far more rapidly as an analyst.

You're going to this job to learn so that some day you be a great investor (well, I did at least) . I'd pick a $500mm no-name HF with an amazing manager who I'm fully convinced will groom me to be a great investor, over a massive fund that just wants me to do channel checks, go to conferences, email note summaries, etc. I'm lucky to have a found a place where I DON'T have to do that and I get plenty of 1-on-1 time with the seniors, but I have friends who didn't get so lucky. Needless to say, they're not particularly happy.

10/16/12
DontMakeMeShortYou:

You're going to this job to learn so that some day you be a great investor (well, I did at least) . I'd pick a $500mm no-name HF with an amazing manager who I'm fully convinced will groom me to be a great investor, over a massive fund that just wants me to do channel checks, go to conferences, email note summaries, etc. I'm lucky to have a found a place where I DON'T have to do that and I get plenty of 1-on-1 time with the seniors, but I have friends who didn't get so lucky. Needless to say, they're not particularly happy.

What is the best way to figure out whether you will be able to learn from someone great? What should one keep in mind when figuring out which fund provides the best possible learning experience?

5/28/12

thanks for posting

WSO's COO (Chief Operating Orangutan) | My story | My Linkedin

PM me if you're traveling to Buenos Aires in 2016 (I live here) :-)

5/28/12

Does this err on the line of a probing question: Salary? Bonus?

If one wanted to become a fund manager for their school's fund (~300k AUM), how would you suggest I go about learning as much as I can about the TMT industry?

Thanks.

The difference between successful people and others is largely a habit - a controlled habit of doing every task better, faster and more efficiently.

5/29/12

Does this err on the line of a probing question: Salary? Bonus?

It's come to the point where first year megafund HF comp is pretty similar to megafund pe comp. Most 1st year all-in comp will come in around high 2s/low 3s--though you can get up as high as 4--with low-mid 100s base and a year-end bonus making up the remainder. That's still chump change compared to what you can make if you really succeed.

Smaller funds tends to have lower and more variable comp (though this is only supported by a very small sample set on my end). However, many smaller places offer the potential for meaningful career acceleration/high upside.

If one wanted to become a fund manager for their school's fund (~300k AUM), how would you suggest I go about learning as much as I can about the TMT industry?

Industry reports, earnings call transcripts, presentations, filings (for example, the S-1--or IPO filing--often includes a good amount of industry commentary and useful facts/figures). Understand the technology/product (you don't need to be able to re-engineer it, but you should get it, even if it's technical/complex). Obviously not relevant until you start doing more company-specific work.

5/29/12
DontMakeMeShortYou:

It's come to the point where first year megafund HF comp is pretty similar to megafund pe comp. Most 1st year all-in comp will come in around high 2s/low 3s--though you can get up as high as 4--with low-mid 100s base and a year-end bonus making up the remainder. That's still chump change compared to what you can make if you really succeed.

Smaller funds tends to have lower and more variable comp (though this is only supported by a very small sample set on my end). However, many smaller places offer the potential for meaningful career acceleration/high upside.

Great observations. Thank you so much for sharing your insights!

Too late for second-guessing Too late to go back to sleep.

5/28/12
  1. What about candidates who are not from top BB (aka not MS / GS / JPM)?

I always thought that PE firms care much more about pedigree, while HF put more emphasis on the actual experience (books read, personal trading, etc.)

  1. How much of the "edge" do you gain by talking with people outside of your immediate professional circle? I've heard of a case when an analyst called WalMart managers and ask them about the best selling toys.
  2. Which blogs & news do you and your co-workers read on daily / weekly basis?
  3. Book recommendations? Preferably something not as obvious as Intelligent Investor, Common Stocks and Uncommon Profits, or books with Buffett in their titles

Thank you in advance

5/30/12

1. What about candidates who are not from top BB (aka not MS / GS / JPM)?
I always thought that PE firms care much more about pedigree, while HF put more emphasis on the actual experience (books read, personal trading, etc.)

Unfortunately, pedigree absolutely matters and coming from a lesser firm puts you at an immediate disadvantage. Furthermore, there continues to be school-based discrimination. I was at a top group which, collectively, received every headhunter-driven interview out there. There were some funds that literally interviewed every one of the HF-pursuing analysts, but others picked only a minority. That minority tended to come from top targets. It was not at all based on who the best analyst was, though our group as a whole didn't really have any weak analysts as far as I was aware.

The reasoning behind this is relatively simple: hedge funds often hire multiple headhunters to fill a position, as well as reach out through personal and professional networks. Because a headhunter is limited in the number of candidates they can refer, they tend to select the "paper rockstars"--ie, top bb/elite boutique, high GPA, top target school kids.

By no means am I suggesting that only those of highest pedigree can get these jobs. You may have an uphill battle, but it can certainly be circumvented.

  1. Reach out to all of the headhunters, even the obscure ones that may not have many opportunities for you. Dynamics and SearchOne have the most post-banking HF clients, but there are many others that can help you.
  2. Crush the headhunter interview.

Demonstrate an unbridled passion for investing. Talk about the PA you've run since early college, even if you've never touched a brokerage account in your life. They need to be convinced that you love investing and you are absolutely certain that you want to be a HF analyst. Even better, tell them you felt that way since your early interest in college, and time and experience has only helped solidify that initial gut feeling.

You need to convince them that you are a top analyst, which, as long as you're decent, will be easy enough to do because rankings at most banks don't come out until you've completed your first full year. At that point, even if you're second tier, it will be good enough. Do not do this if you think you're going to be mid-tier or lower, because if you haven't locked up a job by then, you will have some pissed off headhunters and they'll have no trouble deciding they don't want to work with you anymore

When they ask if you've considered PE, immediately respond with "no." There should be no thinking. No hesitance. If you're uncertain about whether you want to do PE or HF, 95% of the time you will fail the HF process and end up in PE.

Finally, get them to like you as a person. I swear each analyst class gets nerdier by the year, but for those of you that do have reasonable social skills, lay on the charm, be funny, and get them to develop a vested interest in you. This is racist, but if you're Asian and come in fitting the stereotype, you are likely fucked.

  1. You need to go into your first real hedge fund interview way over-prepared. You need to impress these guys because if a headhunter has taken a leap of faith on you and you bomb on the first opportunity they give you, then you'll have some difficulty winning their trust back.
  2. If the headhunter route is relatively fruitless, networking and cold emails are another option. You'll get plenty of rejections, but just like going out and approaching girls, you know it's a numbers game. You will get rejected regularly, but with enough approaches you'll get enough "yeses" to make it worthwhile.
  3. The other thing you can do is to speak with fellow analysts and other friends at banks to try to figure out where they're interviewing, and then send e-mails to those funds telling them that you're aware they're running a search process and you were hoping to be considered for an interview. Reword and include more than just that, attach a resume, and hope for the best.
  4. In securing a job, you absolutely need solid references. Have at least 2 people that will go to bat for you without a doubt. Funds will sometimes call other random people they know at your fund, but hopefully you have a solid reputation and that's not an issue. As long as you're not a bad analyst, you should be fine.

2. How much of the "edge" do you gain by talking with people outside of your immediate professional circle? I've heard of a case when an analyst called WalMart managers and ask them about the best selling toys.

I talk to a wide variety of people: buyside and sellside analysts, experts/consultants, company management, investor relations, lower-level employees, and others I'm not thinking of at the moment. The usefulness of channel checks varies significantly by industry. If someone came to me and told me that they had this amazing variant view on CAT (Caterpillar) specifically, and not just macro, I'd question the legality of their information. It's difficult to do extremely meaningful bottoms-up analysis on a massive heavy industrial machinery manufacturer with operations around the globe. While there is a modicum of stock-specific analysis that will be helpful, CAT is very much a macro-driven name, so whether you're buying, shorting, or none of the above, you're going to be relying on your macro and industry-related work more than anything else.

3. Which blogs & news do you and your co-workers read on daily / weekly basis?

  1. Book recommendations? Preferably something not as obvious as Intelligent Investor, Common Stocks and Uncommon Profits, or books with Buffett in their titles

The typical news sources: WSJ, FT, Economist, Bloomberg, and others. I try to avoid reading articles that will be absolutely useless to me in a few months' time. For example, while the killing in Lybia is inhumane and highly important current event, knowing too many of its details will do nothing for me in the long run. I read headlines and I skim the first paragraph, if anything. I prefer to spend my reading time on either really interesting articles, or anything that will help me develop professionally or personally long-term.

I don't really follow any blogs personally beyond some industry-specific stuff that I've found helpful. The reason is that I get so many summaries and articles through the banks and industry experts we hire, that I have more than enough to read to get my fill.

In my free time, my reading is either mindless shit on the internet or a good book--all depends on my mood.

Books?

If I had to pick just one thing that flicked that light bulb in my head and made me certain I wanted to be an investor, it would be this behavioral finance class I snuck into at college (they were full and not letting undergrads in; too bad for them I'm not very good at taking "no" for an answer). My biggest interest, by far, is human behavior/interaction/motivation/etc. In terms of what books I read, the majority are focused on cognitive, behavioral, and motivational theories. My most recent book was "The Social Animal," by David Brooks. Definitely recommend it.

That may sound strange, but I think that's one of the big reasons one of the guys at the fund absolutely loved me. I'm great at reading people. I understand framing and asking questions in such a way that I maximize the chances of getting the answer that I want. I pay close attention to body language and voice intonation, etc etc. My father was in intelligence and I grew up learning this stuff, so it's not just something I picked up out of the blue. I am not expert by any means, nor do I even have so much as a bachelor's degree in any of those fields, but I read a lot and then refine my understanding of the material through repeated practice and observation. Also, due to my father, I'm a natural skeptic, which I've found to be quite useful when the vast majority of people you interact with have a reason to lie to you or bend the truth.

Accounting, financial statement analysis, and solid modeling skills are the most important for a junior analyst, but as you progress through the ranks, so many more qualitative factors enter into decision-making processes. You'll sometimes have to make a call based on the gut feeling you had after a meeting with a management team. You'll have to detect lying. You'll have to understand how people will behave and why: politicians, businessmen, consumers, etc etc. Combine that with a near-mastery of the financial side, and you can be a very, very good analyst.

In terms of finance stuff, I don't know that I've found any books particularly useful. I enjoyed Einhorn's "Fooling some of the People All of the Time." I've read a few other finance books, but typically found them minimally useful in terms of teaching me how to invest. I'd rather read something that would give me better insights into what drives a person's purchasing decisions, or how to interpret macro events more accurately, etc etc. I want to learn things, not just read some rich guy telling me how he made all these wonderful investments, built a fortune, all the while making it seem near-effortless. There are good ones, but I haven't gotten around to reading them.

For example, you hear Buffett talk all the time, spewing his cliche investing advice of "buy good businesses at good prices. Fucking brilliant. Why did I never think of that? Now tell me how to actually do that asshat. Most of my financial reading has led me to learning some history and maybe some relevant case studies, which limitedly helpful, at best.

I'd prefer to read Einhorn's pitch on GMCR, Ackman's pitch on GGP, or any of the other detailed presentations out there. I don't want to read theory or watered down advice. I want to understand how good investors think and for me the best way to do that is to have them literally walk me through their thought process.

5/30/12

1. What about candidates who are not from top BB (aka not MS / GS / JPM)?
I always thought that PE firms care much more about pedigree, while HF put more emphasis on the actual experience (books read, personal trading, etc.)

Unfortunately, pedigree absolutely matters and coming from a lesser firm puts you at an immediate disadvantage. Furthermore, there continues to be school-based discrimination. I was at a top group which, collectively, received every headhunter-driven interview out there. There were some funds that literally interviewed every one of the HF-pursuing analysts, but others picked only a minority. That minority tended to come from top targets. It was not at all based on who the best analyst was, though our group as a whole didn't really have any weak analysts as far as I was aware.

The reasoning behind this is relatively simple: hedge funds often hire multiple headhunters to fill a position, as well as reach out through personal and professional networks. Because a headhunter is limited in the number of candidates they can refer, they tend to select the "paper rockstars"--ie, top bb/elite boutique, high GPA, top target school kids.

By no means am I suggesting that only those of highest pedigree can get these jobs. You may have an uphill battle, but it can certainly be circumvented.

  1. Reach out to all of the headhunters, even the obscure ones that may not have many opportunities for you. Dynamics and SearchOne have the most post-banking HF clients, but there are many others that can help you.
  2. Crush the headhunter interview.

Demonstrate an unbridled passion for investing. Talk about the PA you've run since early college, even if you've never touched a brokerage account in your life. They need to be convinced that you love investing and you are absolutely certain that you want to be a HF analyst. Even better, tell them you felt that way since your early interest in college, and time and experience has only helped solidify that initial gut feeling.

You need to convince them that you are a top analyst, which, as long as you're decent, will be easy enough to do because rankings at most banks don't come out until you've completed your first full year. At that point, even if you're second tier, it will be good enough. Do not do this if you think you're going to be mid-tier or lower, because if you haven't locked up a job by then, you will have some pissed off headhunters and they'll have no trouble deciding they don't want to work with you anymore

When they ask if you've considered PE, immediately respond with "no." There should be no thinking. No hesitance. If you're uncertain about whether you want to do PE or HF, 95% of the time you will fail the HF process and end up in PE.

Finally, get them to like you as a person. I swear each analyst class gets nerdier by the year, but for those of you that do have reasonable social skills, lay on the charm, be funny, and get them to develop a vested interest in you. This is racist, but if you're Asian and come in fitting the stereotype, you are likely fucked.

  1. You need to go into your first real hedge fund interview way over-prepared. You need to impress these guys because if a headhunter has taken a leap of faith on you and you bomb on the first opportunity they give you, then you'll have some difficulty winning their trust back.
  2. If the headhunter route is relatively fruitless, networking and cold emails are another option. You'll get plenty of rejections, but just like going out and approaching girls, you know it's a numbers game. You will get rejected regularly, but with enough approaches you'll get enough "yeses" to make it worthwhile.
  3. The other thing you can do is to speak with fellow analysts and other friends at banks to try to figure out where they're interviewing, and then send e-mails to those funds telling them that you're aware they're running a search process and you were hoping to be considered for an interview. Reword and include more than just that, attach a resume, and hope for the best.
  4. In securing a job, you absolutely need solid references. Have at least 2 people that will go to bat for you without a doubt. Funds will sometimes call other random people they know at your fund, but hopefully you have a solid reputation and that's not an issue. As long as you're not a bad analyst, you should be fine.

2. How much of the "edge" do you gain by talking with people outside of your immediate professional circle? I've heard of a case when an analyst called WalMart managers and ask them about the best selling toys.

I talk to a wide variety of people: buyside and sellside analysts, experts/consultants, company management, investor relations, lower-level employees, and others I'm not thinking of at the moment. The usefulness of channel checks varies significantly by industry. If someone came to me and told me that they had this amazing variant view on CAT (Caterpillar) specifically, and not just macro, I'd question the legality of their information. It's difficult to do extremely meaningful bottoms-up analysis on a massive heavy industrial machinery manufacturer with operations around the globe. While there is a modicum of stock-specific analysis that will be helpful, CAT is very much a macro-driven name, so whether you're buying, shorting, or none of the above, you're going to be relying on your macro and industry-related work more than anything else.

On the other hand, I've been working on GMCR for the better part of 6 months and the channel checks do provide some insight, but the info you gather isn't always particularly easy to synthesize and use to comfortably defend a position, nor do most talks provide much in terms of quantitative data. Furthermore, the people you talk to might not always be honest. Or, vocabulary used to describe the exact same scenario could vary. For example, "things haven't been that great" for one guy, could mean "this shit may as well be worthless--I can barely move any units anymore." There's a number of other idiosyncrasies, but you get the point.

Anyway, I convinced a PM to go short GMCR slightly before the Q1 call. We got crushed. Up 20%+. I updated my model, stepped back to think about what this meant for our investment, and decided that I was still comfortable being a short. After a few emails, PM and I spoke, and while he joked that my leaving would save face, it'd be better if they fired me because I'd get some severance. "Oh, and just avoid trying to invest that money we give you." We're on great terms and he knows this shit happens. Everyone hates losing money, so it's not like he was extremely cheery, but he thought I had done good work and he approved the trade because he also believed in it. We ended up adding to the position. Fast forward a little over 2 months. This is a week or 2 before the Q2 call. The results of my channel checks were someone dichotomous: either "everything's fine," or "why the fuck did I buy so many of these things? They're not moving the way they used to and I can't fucking wait to get rid of them."

The "things are fine" came from NPD, a reputable data provider. Some other channel checks indicated the same thing. However, after speaking to some execs and lower level management at some of the larger retailers, I got a completely different message: volumes have come down significantly. That's the big picture; a lot of work went into filtering post the raw data accumulation.

Met up with my PM and told him I think we should buy some puts, with the rationale being (in no particular order)

  1. Q1 was a fluke. People have realized that and while the market hasn't been great recently, providing us a nice tailwind, we're actually up slightly from we got in, even if you exclude what we added post-Q1.
  2. We can stand the volatility: the fundamental thesis continues to hold ground and we've only become more comfortable with it over time
  3. The majority opinion is that Q2 will be fine. If we're wrong, maybe we lose some money on the puts, but the risk/reward is strongly in our favor. Plus, our work is all but proprietary in the sense that no one has gone to the [entirely legal] lengths we have gone to acquire our robust dataset.
  4. Plain and simple, I think the risk/reward is extremely compelling,

Long story short: stock down 40% post-earnings and I was pretty damn happy with myself. That's one of the favorite parts of my job: standing out of the crowd and seeing something that few others do, and then being proven right in a very meaningful way.

3. Which blogs & news do you and your co-workers read on daily / weekly basis?

  1. Book recommendations? Preferably something not as obvious as Intelligent Investor, Common Stocks and Uncommon Profits, or books with Buffett in their titles

The typical news sources: WSJ, FT, Economist, Bloomberg, and others. I try to avoid reading articles that will be absolutely useless to me in a few months' time. For example, while the killing in Lybia is inhumane and highly important current event, knowing too many of its details will do nothing for me in the long run. I read headlines and I skim the first paragraph, if anything. I prefer to spend my reading time on either really interesting articles, or anything that will help me develop professionally or personally long-term.

I don't really follow any blogs personally beyond some industry-specific stuff that I've found helpful. The reason is that I get so many summaries and articles through the banks and industry experts we hire, that I have more than enough to read to get my fill.

In my free time, my reading is either mindless shit on the internet or a good book--all depends on my mood.

Books?

If I had to pick just one thing that flicked that light bulb in my head and made me certain I wanted to be an investor, it would be this behavioral finance class I snuck into at college (they were full and not letting undergrads in; too bad for them I'm not very good at taking "no" for an answer). My biggest interest, by far, is human behavior/interaction/motivation/etc. In terms of what books I read, the majority are focused on cognitive, behavioral, and motivational theories. My most recent book was "The Social Animal," by David Brooks. Definitely recommend it.

That may sound strange, but I think that's one of the big reasons one of the guys at the fund absolutely loved me. I'm great at reading people. I understand framing and asking questions in such a way that I maximize the chances of getting the answer that I want. I pay close attention to body language and voice intonation, etc etc. My father was in intelligence and I grew up learning this stuff, so it's not just something I picked up out of the blue. I am not expert by any means, nor do I even have so much as a bachelor's degree in any of those fields, but I read a lot and then refine my understanding of the material through repeated practice and observation. Also, due to my father, I'm a natural skeptic, which I've found to be quite useful when the vast majority of people you interact with have a reason to lie to you or bend the truth.

Accounting, financial statement analysis, and solid modeling skills are the most important for a junior analyst, but as you progress through the ranks, so many more qualitative factors enter into decision-making processes. You'll sometimes have to make a call based on the gut feeling you had after a meeting with a management team. You'll have to detect lying. You'll have to understand how people will behave and why: politicians, businessmen, consumers, etc etc. Combine that with a near-mastery of the financial side, and you can be a very, very good analyst.

In terms of finance stuff, I don't know that I've found any books particularly useful. I enjoyed Einhorn's "Fooling some of the People All of the Time." I've read a few other finance books, but typically found them minimally useful in terms of teaching me how to invest. I'd rather read something that would give me better insights into what drives a person's purchasing decisions, or how to interpret macro events more accurately, etc etc. I want to learn things, not just read some rich guy telling me how he made all these wonderful investments, built a fortune, all the while making it seem near-effortless. There are good ones, but I haven't gotten around to reading them.

For example, you hear Buffett talk all the time, spewing his cliche investing advice of "buy good businesses at good prices. Fucking brilliant. Why did I never think of that? Now tell me how to actually do that asshat. Most of my financial reading has led me to learning some history and maybe some relevant case studies, which limitedly helpful, at best.

I'd prefer to read Einhorn's pitch on GMCR, Ackman's pitch on GGP, or any of the other detailed presentations out there. I don't want to read theory or watered down advice. I want to understand how good investors think and for me the best way to do that is to have them literally walk me through their thought process.

7/9/12
DontMakeMeShortYou][quote:

1. What about candidates who are not from top BB (aka not MS / GS / JPM)?
4. Book recommendations? Preferably something not as obvious as Intelligent Investor, Common Stocks and Uncommon Profits, or books with Buffett in their titles

The typical news sources: WSJ, FT, Economist, Bloomberg, and others. I try to avoid reading articles that will be absolutely useless to me in a few months' time. For example, while the killing in Lybia is inhumane and highly important current event, knowing too many of its details will do nothing for me in the long run. I read headlines and I skim the first paragraph, if anything. I prefer to spend my reading time on either really interesting articles, or anything that will help me develop professionally or personally long-term.

I don't really follow any blogs personally beyond some industry-specific stuff that I've found helpful. The reason is that I get so many summaries and articles through the banks and industry experts we hire, that I have more than enough to read to get my fill.

In my free time, my reading is either mindless shit on the internet or a good book--all depends on my mood.

Books?

If I had to pick just one thing that flicked that light bulb in my head and made me certain I wanted to be an investor, it would be this behavioral finance class I snuck into at college (they were full and not letting undergrads in; too bad for them I'm not very good at taking "no" for an answer). My biggest interest, by far, is human behavior/interaction/motivation/etc. In terms of what books I read, the majority are focused on cognitive, behavioral, and motivational theories. My most recent book was "The Social Animal," by David Brooks. Definitely recommend it.

That may sound strange, but I think that's one of the big reasons one of the guys at the fund absolutely loved me. I'm great at reading people. I understand framing and asking questions in such a way that I maximize the chances of getting the answer that I want. I pay close attention to body language and voice intonation, etc etc. My father was in intelligence and I grew up learning this stuff, so it's not just something I picked up out of the blue. I am not expert by any means, nor do I even have so much as a bachelor's degree in any of those fields, but I read a lot and then refine my understanding of the material through repeated practice and observation. Also, due to my father, I'm a natural skeptic, which I've found to be quite useful when the vast majority of people you interact with have a reason to lie to you or bend the truth.

I completely agree. I loved "The Social Animal." I think psychology books can be great tools no matter what field you come from. That and motivational books/CD's/MP3s although I've found that those are better to read in bite sized peices as opposed to swallowing the whole enchilada at once :)

5/28/12

Working at a 10B fundamental fund, how many PMs/guys who actually manage money do you have? And do you find yourselves "diversifying" just for the sake of putting capital to work? I'm assuming 10B means a pretty decent headcount, so how much exposure as an analyst do you get in actually sizing positions and making decisions? Does your PM trust you enough or does he still spend a lot of time following up on a possible idea you've presented him with?

Sorry that's a lot of questions, answer whichever ones you can. Thanks for the thread bro

I hate victims who respect their executioners

5/31/12
BlackHat:

Working at a 10B fundamental fund, how many PMs/guys who actually manage money do you have?

There are ~20 total investment professionals in NY, with a ~40/60 PM/analyst split. Don't know overseas numbers. With that said, the founder, his #2, and the heads of credit and equity manage the majority of the capital. The smaller PMs, in addition to managing their own books, often try to get ideas into the bigger funds. Hopefully that's a clear explanation. Let me know if I should elaborate.

And do you find yourselves "diversifying" just for the sake of putting capital to work?

Not that I'm aware of. Perhaps a little bit of that goes on, but for the most part you sit on cash because you don't see any better place to put your money. Why diversify if it might hurt your returns.

I'm assuming 10B means a pretty decent headcount, so how much exposure as an analyst do you get in actually sizing positions and making decisions?

Depends on the quality of your ideas and how much goodwill you've built with the PMs. We typically call a stock that's 1% of the a portfolio a "full position." 2% is high conviction. Rarely go above that, but it has happened.

When I started, no one had any reason to trust me. My first solo idea went on as a quarter position (this would be $25 million if we were at $10b, but my fund is somewhat larger than that). To build trust, I worked with senior analysts--one in particular got the majority of my time--and either filtered my ideas through them or helped them flesh out stuff they were working on. I learn from their thought process, get some of the credit if things work out, and am cushioned on the downside. At one point the ideas I had worked on with just one senior analyst came out to well over $1 billion.

To answer more succinctly: the more trust you have built up with the seniors, the more people follow your recommendations. However, if you've been on a cold streak, you can get taken down a few notches very quickly. The good thing is, if you make a few solid picks, you can also move up rapidly. At the end of the day, the PMs have the final decision, but sometimes just tell the traders to listen to the senior analysts and step out of the way. That's something I love about the job: get rid of bureaucracy wherever possible.

Does your PM trust you enough or does he still spend a lot of time following up on a possible idea you've presented him with?

Sorry that's a lot of questions, answer whichever ones you can. Thanks for the thread bro

Back when I worked with senior analysts, they would look at my analysis in more detail (though no one was actually checking my work, or even stepping into the model), but now that it's more direct with PMs I spend very little time on details and focus on the big picture instead. If my pitch is too long, I notice I lose their attention quickly. There's no standard amount of time. I spent a ton of time talking about Facebook because the PM was just interested in theorizing about the future vs. as little as 5-10 minutes on a position that ended up becoming very big, just because he had somewhat heard the story elsewhere.

5/28/12

What kind of a case question did you get? Do you mind elaborating?

Thanks!

6/1/12
dogboo:

What kind of a case question did you get? Do you mind elaborating?

Thanks!

So broad. It's usually a test of how you would value companies with varying characteristics. They often start you off with little information and you have to ask enough/the right questions to arrive at the correct conclusion.

some examples:

Two companies in the same industry (he gives a little more detail). One has 2x the margin of the other. He gave me some PE multiples. Do either of these seem over/undervalued? Why?

What should trade at a higher multiple: a fast food chain that owns its stores or franchises?

Company is trading at X PE and raises debt at Y%. Is it accretive or dilutive? At what interest rate does it not matter?

5/28/12

Thanks for this, love these type of posts.

I've just got a few questions about headhunters. Firstly, as far as you know, where do they do prowl? Like is it mostly just BB IB, or are they all over? Secondly, from your experience how aggresive were they? Like with what frequency would you be contacted with opportunities? Just curious, because the mere thought of having opportunities thrown at you instead of having to chase them down creates a movement in my pants

GBS

5/31/12
GoldmanBallSachs:

Thanks for this, love these type of posts.

I've just got a few questions about headhunters. Firstly, as far as you know, where do they do prowl? Like is it mostly just BB IB, or are they all over? Secondly, from your experience how aggresive were they? Like with what frequency would you be contacted with opportunities? Just curious, because the mere thought of having opportunities thrown at you instead of having to chase them down creates a movement in my pants

I'd say the average BB analyst will get contacted by at least a few. You can get the full list of HHs from the 2nd years. No shame in reaching out to them. Being in a top group made them work harder for you because you were easier to sell, but people at less elite places tended could easily find themselves almost ignored. How you interview makes a difference too: if you're in a top group and bomb your first few, you'll disappear off their radar for a while. On the other hand, you can make up for being at a lower tier firm by crushing meetings.

5/28/12

How are the midwest targets (U Chicago and Northwestern U) represented in NYC area? In banking and HF?

5/31/12
corilla:

How are the midwest targets (U Chicago and Northwestern U) represented in NYC area? In banking and HF?

Less well represented than some of the top east coast schools, but primarily by virtue of location. They do well in recruiting for banking. Not sure about HFs. I don't really know the average analyst demographics, but if you assume that most of them came from elite banking groups/shops, then it would be safe to assume that there's a big HYPW contingent, which I've definitely found. Other good schools are sprinkled in throughout.

5/28/12

Hello,

Sounds like a pretty exciting job to me because you mentioned the two magical words: critical thinking. I wish some day I will also make it to a relevant HF! :)

Regarding the day-to-day work, do you have to deal with "random" stuff such as compliance / fund accountants / custodians / transfer agents ?

How quantitative can the job get? Here in Europe I see that quants are much much more on demand.

Last (but not least..) do you believe that an analyst candidate from a specific country can have a competitive advantage over others because the fund wants to start trading/investing in the country where he is (the candidate) from?

Thanks!

Colourful TV, colourless Life.

5/31/12
Bonus:

Hello,

Sounds like a pretty exciting job to me because you mentioned the two magical words: critical thinking. I wish some day I will also make it to a relevant HF! :)

Regarding the day-to-day work, do you have to deal with "random" stuff such as compliance / fund accountants / custodians / transfer agents ?

How quantitative can the job get? Here in Europe I see that quants are much much more on demand.

Last (but not least..) do you believe that an analyst candidate from a specific country can have a competitive advantage over others because the fund wants to start trading/investing in the country where he is (the candidate) from?

Thanks!

None of the "random" back office stuff you mentioned. It's not until you're a more senior analyst that you may do a meeting here and there with investors; however, that's only if you have one or several of the very core positions in the fund and investors want to hear from the horse's mouth, so to speak.

My job is about as quantitative as banking: not at all in my opinion. You don't need more than basic algebra. There are, however, HF strategies and jobs that are extremely quantitative. Renaissance Technologies is famous for its math whiz of a founder and its practice of hiring Ph.Ds in astrophysics, mathematics, and other quantitative fields.

Language/country definitely help. For example, when funds expanded to Brazil in the last decade, you saw many of the seats filled with native Portuguese speakers.

5/28/12

Thanks for doing this. What are your relationships like with the PMs at your fund? Do analysts mostly hang with analysts or does everyone mix?

"Do not go gentle into that good night"

6/1/12
tangent style:

Thanks for doing this. What are your relationships like with the PMs at your fund? Do analysts mostly hang with analysts or does everyone mix?

We all joke around and are pretty casual with each other--at least compared to my banking experience--but people take work extremely seriously... The mood very much swings with the market. Emotional swings/outbursts have definitely happened.

I don't really hang out with anyone from work. Everyone is older by at least a few years and in a very serious relationship or married. I'm tight with some of the guys and we'll grab a meal or drinks here and there, but it's rare. That's the thing I miss most about banking--having a class of kids my age to shoot the shit with. Definitely feel like more of an adult in this role. I've never been in a hurry to become one... ha

6/1/12
DontMakeMeShortYou:
tangent style:

Thanks for doing this. What are your relationships like with the PMs at your fund? Do analysts mostly hang with analysts or does everyone mix?

We all joke around and are pretty casual with each other--at least compared to my banking experience--but people take work extremely seriously... The mood very much swings with the market. Emotional swings/outbursts have definitely happened.

I don't really hang out with anyone from work. Everyone is older by at least a few years and in a very serious relationship or married. I'm tight with some of the guys and we'll grab a meal or drinks here and there, but it's rare. That's the thing I miss most about banking--having a class of kids my age to shoot the shit with. Definitely feel like more of an adult in this role. I've never been in a hurry to become one... ha

Is there a dress code at your firm? My experience is that, unlike sell side and IBD in particular, many buy side shops are very relaxed and laid back with people showing up in at the offices in jeans and sometimes even flip flops. This makes sense since as an investment professional you impress people with your ability to generate returns, not with slick dresses or accessories.

Too late for second-guessing Too late to go back to sleep.

7/6/12
brandon st randy:
DontMakeMeShortYou:
tangent style:

Thanks for doing this. What are your relationships like with the PMs at your fund? Do analysts mostly hang with analysts or does everyone mix?

We all joke around and are pretty casual with each other--at least compared to my banking experience--but people take work extremely seriously... The mood very much swings with the market. Emotional swings/outbursts have definitely happened.

I don't really hang out with anyone from work. Everyone is older by at least a few years and in a very serious relationship or married. I'm tight with some of the guys and we'll grab a meal or drinks here and there, but it's rare. That's the thing I miss most about banking--having a class of kids my age to shoot the shit with. Definitely feel like more of an adult in this role. I've never been in a hurry to become one... ha

Is there a dress code at your firm? My experience is that, unlike sell side and IBD in particular, many buy side shops are very relaxed and laid back with people showing up in at the offices in jeans and sometimes even flip flops. This makes sense since as an investment professional you impress people with your ability to generate returns, not with slick dresses or accessories.

Won't comment on my specific firm, but the most formal I've seen is slacks/button down. Some are as loose as jeans + polo. Typical is either jeans+button down or slacks and button down.

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5/28/12

Comparing event driven equities (liquid) investing to distressed debt investing (illiquid), which do you prefere and why? What are the pros and cons of the liquidity of equity investing compared to distressed debt?

6/6/12
NewGuy:

Comparing event driven equities (liquid) investing to distressed debt investing (illiquid), which do you prefere and why? What are the pros and cons of the liquidity of equity investing compared to distressed debt?

Equity and credit guys tend to be very different. A credit guy once told me that if he had the same outlook in his personal life as he did on the job, he would never allow anyone in his life, save maybe a dog (under the belief that dogs love you unconditionally). As a credit guy, he sees the glass half empty, and he's expecting that at any moment some clumsy shit from the company will walk by and tip the damn thing over. Expecting that to happen, he tries to figure out exactly how much water will be left post-tippage, and makes bets accordingly. What I mean to say is: credit guys are very concerned about protecting their downside and try very hard to quantify the risk/return of any investment with what they believe to be reasonable accuracy. After all, they're getting paid a coupon and have a specific maturity date when they're supposed to receive the principal payment. Furthermore, beyond understanding businesses, they get into the nitty gritty of credit docs, bankruptcy law, etc. These guys definitely develop a lot more legal knowledge than the typical equity analyst.

Equity guys, while also thinking about the downside, have to be a bit softer in their investment analysis. There is no coupon or principal payment. There is no maximum return. The most you can lose is the money you put in, but you can make 10x+ in return (obviously not your average investment). What I mean is: equity guys typically have a rosier picture of the world. That is, of course, unless you're Chanos.

Overall, equities are riskier, more volatile, offer higher potential returns (goes with the risk), and demand investors to have a softer view on investing than credit guys. There's more to it, but not worth it to go into too many details.

There are no pros and cons: some people are better at one than the other. It's a personality thing. I like working on the equity side more, so that's what I focus on. If I liked credit more, I'd spend more time there. I'm lucky to have that flexibility, but you usually don't have that opportunity. Before you commit to one or the other, try to figure out what your personality is like and go from there. Remember, credit guys focus on cash flow, the downside, and credit-specific technical knowledge (legal, for example). If that's for you, go for it. If it's not, then you're probably an equity guy. Equities can be cut up into growth, value, etc, but I won't go into that now. Just keep in mind that most people venture toward value when they first start because that's all they know, but it may not be what they're truly best suited for. Keep an open mind.

5/28/12

-In one of your earlier replies you made a delineation where there are PM's (Einhorn, Ackman) that are deeply involved with individual names (Einhorn, Ackman) vs. those who have dozens of PM's that run separate books. If you work at a L/S value fund, is it safe to assume that you fall in more the previous camp? If so, how concentrated are you guys?

-Was it hard to pick up the distressed credit stuff relative to equity? I feel like equities come pretty intuitively and banking helps with event driven, but credit can seem like a whole different world.

The more senior analysts - how much responsibility do they have and is there a path to a capital sleeve?

Thanks in advance.

6/6/12
Gray Fox:

-In one of your earlier replies you made a delineation where there are PM's (Einhorn, Ackman) that are deeply involved with individual names (Einhorn, Ackman) vs. those who have dozens of PM's that run separate books. If you work at a L/S value fund, is it safe to assume that you fall in more the previous camp? If so, how concentrated are you guys?

-Was it hard to pick up the distressed credit stuff relative to equity? I feel like equities come pretty intuitively and banking helps with event driven, but credit can seem like a whole different world.

The more senior analysts - how much responsibility do they have and is there a path to a capital sleeve?

Thanks in advance.

There's a middle ground between the SACs and the Greenlights of the world, and that's where my fund and most others fall. We have a few PMs who manage the vast majority of the portfolio. They figure out themes, exposures (long vs. short and to what extent), and then pick and choose analyst ideas based on how they've decided what direction to take the fund.

I'd say we have around 50-60 real positions (excludes hedges, money market instruments, etc) across the fund, which includes both equities and credit. I don't know the exact number, but it's probably around there and maybe even a little higher.

Distressed is very different because your focus shifts almost exclusively to cash flow and the credit docs. Some things that didn't matter in equities suddenly became very important. Capex, for example, is crucial in credit analysis, whereas in equities it often just gets glanced at briefly. Another thing that was tricky was getting used to reading and interpreting all the legalese in the credit docs, but you do get used to it eventually. Finally, since you're guaranteed certain cash flows as an investor, you think about the investment in different terms... you can quantify your upside and downside more accurately.

Spoke about this in another reply, but senior analysts can have a very significant amount of responsibility. If they gain PM trust, they can get a ton of $ on the books. It's rare that they get a certain amount of capital to play with. Usually, how much $ you're working with is directly dependent on the quality of the ideas you're pitching and how much faith the senior guys have in you.

5/28/12

Have you seen any non-traditional analyst hires, most specifically those who did not spend 2 years at a bank or asset manager? What were their backgrounds?

6/6/12
via2329:

Have you seen any non-traditional analyst hires, most specifically those who did not spend 2 years at a bank or asset manager? What were their backgrounds?

Junior guys have all had very typical backgrounds. On the other hand, senior guys have had some very roundabout, non-traditional paths. It takes longer if you don't fill the cookie-cutter mold, but it's still possible to break in.

5/28/12

Can you give us an example of an idea you pitched that was successful in the last year? No need for specific company information, but want to see how you sourced the idea and how you pitched it as differentiated from consensus.
Thanks!

6/6/12
madgames:

Can you give us an example of an idea you pitched that was successful in the last year? No need for specific company information, but want to see how you sourced the idea and how you pitched it as differentiated from consensus.
Thanks!

What could best be characterized as a software company was coming out with a new product that would make up a big portion of their earnings going forward. I did some research into the product and its target market and came to the conclusion that Street estimates were wildly optimistic. That was enough to get me to want to short it, but on top of that I could add that they had a shitty management team with excessive turnover, sketchy accounting, insider selling, expensive multiple, history of fucking over investors, etc etc. People didn't understand this product and the market well, and after doing my work, I got extremely comfortable with my hypothesis.

I pitched it to the PM and he liked it because, in addition to everything above, it was a situation where we had a very definitive timeline (product release) and everyone seemed to be on the other side of the trade, meaning that if we were wrong, we probably didn't stand to lose a ton.

Sourcing? Just knew the space somewhat and people were talking about the product a lot, so I dug in further to see if there was an opportunity.

5/28/12

Thanks for this. How difficult is it to get into HF from a non-traditional path? I'm in a top 3 consulting firm (post MBA also from a top school). Is it possible to break into HF without having done IB? Alternatively, Do you see a lot of people who were in Equity Sales/Research out there?

6/6/12
Consulting_Chimp:

Thanks for this. How difficult is it to get into HF from a non-traditional path? I'm in a top 3 consulting firm (post MBA also from a top school). Is it possible to break into HF without having done IB? Alternatively, Do you see a lot of people who were in Equity Sales/Research out there?

Hard to quantify difficulty. It's difficult to get into a good HF period. The more you look like their ideal candidate, the easier it is. The paths outside of IB that are common are equity research (NOT sales - sales guys make their money on relationships, not understanding financial statements and having a strong investing acumen), PE, and other asset management roles where you do detailed company-specific research (this is for L/S funds - the macro guys would want a different skillset).

5/29/12

Hi,

First of all, thanks for the great thread:)

I have a couple of interviews questions to ask:

  • when you mentionned that u have met every member of the investment team during the interviews, was there similarity between interviewers or everyone tested you on different topics?
  • is it necessary that everyone says ok to make u in finally?
  • the case study comes after your interviews with everyone? take-home and in-house?
  • regarding the stock pitch, would it matter if you pitched the same stocks for defferent interviewers?
  • what is your view on the weight of technical vs. personality questions?
  • what's ur general advice for interviewing L/S equity HFs?

thanks in advance!

5/30/12
Morice:

Hi,

First of all, thanks for the great thread:)

I have a couple of interviews questions to ask:

  • when you mentionned that u have met every member of the investment team during the interviews, was there similarity between interviewers or everyone tested you on different topics?
  • is it necessary that everyone says ok to make u in finally?
  • the case study comes after your interviews with everyone? take-home and in-house?
  • regarding the stock pitch, would it matter if you pitched the same stocks for defferent interviewers?
  • what is your view on the weight of technical vs. personality questions?
  • what's ur general advice for interviewing L/S equity HFs?

thanks in advance!

any reply to these questions? thanks

6/6/12
Morice:

Hi,

First of all, thanks for the great thread:)

I have a couple of interviews questions to ask:

  • when you mentionned that u have met every member of the investment team during the interviews, was there similarity between interviewers or everyone tested you on different topics?
  • is it necessary that everyone says ok to make u in finally?
  • the case study comes after your interviews with everyone? take-home and in-house?
  • regarding the stock pitch, would it matter if you pitched the same stocks for defferent interviewers?
  • what is your view on the weight of technical vs. personality questions?
  • what's ur general advice for interviewing L/S equity HFs?

thanks in advance!

People are naturally going to be different.

Pretty much. If you get a hard "no" you're probably out.

Case study comes after a round or several. You meet with more senior people after the case study. Some firms have it in-house, though most have you do a take-home. I'd rather do in-house because it takes far less time. There was nothing worse than having someone tell me I had 3 weeks to do a case. Wanted to kill myself whenever I heard that. It always meant that if I had any free time, I'd be spending it on the case. There's always more work you can do until the due date arrives.

You usually pitch the same company. Most IB kids had 1 long and 1 short that were thoroughly researched. Better than having 10 ideas without any solid work to back any of them.

Technical and personality are both very important. You need to rank very high on both. Why? Because these guys can afford to be picky.

Be passionate about investing. Know your shit inside out. Have a well-researched idea so you can show them that you're smart and have the right thought process. Demonstrate that you only want to do HFs. Show them that you're hungry as hell and brilliant too.

5/29/12

Any suggestions on what type of questions to ask a PM or analyst at a hedge fund interview? I've been asking a mix of industry / market questions and job / career questions, but not sure what the best route to go is. Thanks.

6/6/12
mwgr5:

Any suggestions on what type of questions to ask a PM or analyst at a hedge fund interview? I've been asking a mix of industry / market questions and job / career questions, but not sure what the best route to go is. Thanks.

You're on the right track. Just show them that you're interested. Some you might be missing: Ask them about investment process, where they see the fund going (if it's smaller), and then general stuff you've probably been asking already

5/29/12

Thank you for this interesting thread...i work at a megafund, but in macro, and I find it interesting to see how much different the jr analyst role is in equities. Where I work the analysts, especially the junior ones, are really very far away from the actual trading decisions and usually focus on more research-type projects such as "create a scenario analysis of japanese debt servicing costs depending on various interest rate paths" or something like that. They give that analysis to the PMs who often dont even discuss the investment/trading implications with the or let them know how they are using that information. Only very senior analysts (ie people who have more then a decade in the business) even are allowed to recommend actual trade ideas let alone have their own balance sheet. Analysts can go years without even having the knowledge of how to put on trades and run a portfolio if they dont get a PM to take them under their wings which happens very rarely and it happens just as often with execution guys or even ops people as it does with analysts. The PMs tend to be almost "cult of personality"-types that are known for bold but prudent risk-taking but dont always get into the nitty gritty of the analysis.

6/6/12
Bondarb:

Thank you for this interesting thread...i work at a megafund, but in macro, and I find it interesting to see how much different the jr analyst role is in equities. Where I work the analysts, especially the junior ones, are really very far away from the actual trading decisions and usually focus on more research-type projects such as "create a scenario analysis of japanese debt servicing costs depending on various interest rate paths" or something like that. They give that analysis to the PMs who often dont even discuss the investment/trading implications with the or let them know how they are using that information. Only very senior analysts (ie people who have more then a decade in the business) even are allowed to recommend actual trade ideas let alone have their own balance sheet. Analysts can go years without even having the knowledge of how to put on trades and run a portfolio if they dont get a PM to take them under their wings which happens very rarely and it happens just as often with execution guys or even ops people as it does with analysts. The PMs tend to be almost "cult of personality"-types that are known for bold but prudent risk-taking but dont always get into the nitty gritty of the analysis.

Have a buddy at a macro fund - I think that's pretty common on your side. I think macro's harder to get comfort on, hence why the timeline seems so stretched out compared to the equity/credit guys. Though, I think it's douchy of them not to be spending time with you/other analysts explaining what's going on - that's the only way to learn and it doesn't kill that much time for them to do so. Nothing you can change unfortunately - you see that on the equity side too.

6/9/12
DontMakeMeShortYou:
Bondarb:

Thank you for this interesting thread...i work at a megafund, but in macro, and I find it interesting to see how much different the jr analyst role is in equities. Where I work the analysts, especially the junior ones, are really very far away from the actual trading decisions and usually focus on more research-type projects such as "create a scenario analysis of japanese debt servicing costs depending on various interest rate paths" or something like that. They give that analysis to the PMs who often dont even discuss the investment/trading implications with the or let them know how they are using that information. Only very senior analysts (ie people who have more then a decade in the business) even are allowed to recommend actual trade ideas let alone have their own balance sheet. Analysts can go years without even having the knowledge of how to put on trades and run a portfolio if they dont get a PM to take them under their wings which happens very rarely and it happens just as often with execution guys or even ops people as it does with analysts. The PMs tend to be almost "cult of personality"-types that are known for bold but prudent risk-taking but dont always get into the nitty gritty of the analysis.

Have a buddy at a macro fund - I think that's pretty common on your side. I think macro's harder to get comfort on, hence why the timeline seems so stretched out compared to the equity/credit guys. Though, I think it's douchy of them not to be spending time with you/other analysts explaining what's going on - that's the only way to learn and it doesn't kill that much time for them to do so. Nothing you can change unfortunately - you see that on the equity side too.

I am not an analyst I am a portfolio manager and I dont spend a ton of time talking to analysts about what's going on because I want them to understand that we are trying to make money this isnt a training program. If an analyst adds value to me then i will reciprocate by being more open but in general they have a job to do and it doesnt involve making trading decisions.

5/29/12

Nice thread +1

5/29/12

Do you think IB is the best route to HF. Or are options such as Sales and Trading or Equity Research just as good or better?

6/6/12
dogboo:

Do you think IB is the best route to HF. Or are options such as Sales and Trading or Equity Research just as good or better?

I see the most IB guys out there, but ER guys get their fair shot as well. My problem with ER is that if you get stuck with a shitty analyst, it could definitely stunt your career. S&T are not the way to go, unless you end up in prop trading that's more akin to fundamental investing than day-trading. Market-makers typically just end up being execution traders on the buyside. Sales guys don't even exist here, except in extremely rare instances. After all, what good is a sales guy to a HF?

5/29/12

This may be probing, but how do your own personal investments fare and do you think they would fare as well without your experience in HF?

6/6/12
SmokeyG:

This may be probing, but how do your own personal investments fare and do you think they would fare as well without your experience in HF?

I've done very well on my personal investments, but given the minimal amount of time I've been around, it's more likely luck than skill attributing to the performance. We'll see what happens long-term. HF experience definitely helps.

5/29/12

In the typical week, how many different companies (the new names) are you expected to research? Or when you're generating your own ideas - what would you say the hit rate is for the number of companies you dig into vs. the ones you come up with a thesis compelling enough that you're willing to show a PM?

It seems like coming up with a divergent opinion on a stock would require a fair amount of time researching a company, and even after researching a company there might not be a compelling value proposition. Obviously this sort of critical thinking and subjective decision making is where HF analysts have to distinguish themselves, but I'm curious to hear what sort of criteria you like to look at to try and find companies of interest.

5/30/12

Thanks for the post, very insightful. Cool to see someone willing to take the time to do this.

Do you have any experience with the HF industry outside of NYC? I have a few close connections with the HF industry out west (California, Portland), and come from a very nontraditional background (as did many of my contacts). I just graduated a nontarget and immediately started doing risk analysis for an energy firm, and am hoping to parlay my skills/experience into the alternative investment field. Specifically, I hedge basis/commodity risk for the firm (frac spreads, NGLs, natural gas, crude). Also hope to have my CFA charter within the next 3 years. Even WITHOUT the connections, does this seem like an attainable aspiration? Or am I a dimwitted plebocite who should leave the HF stuff to Jim Cramer? Let me know.

I was taught that the human brain was the crowning glory of evolution so far, but I think it's a very poor scheme for survival.

6/29/12
Tolland15:

Thanks for the post, very insightful. Cool to see someone willing to take the time to do this.

Do you have any experience with the HF industry outside of NYC? I have a few close connections with the HF industry out west (California, Portland), and come from a very nontraditional background (as did many of my contacts). I just graduated a nontarget and immediately started doing risk analysis for an energy firm, and am hoping to parlay my skills/experience into the alternative investment field. Specifically, I hedge basis/commodity risk for the firm (frac spreads, NGLs, natural gas, crude). Also hope to have my CFA charter within the next 3 years. Even WITHOUT the connections, does this seem like an attainable aspiration? Or am I a dimwitted plebocite who should leave the HF stuff to Jim Cramer? Let me know.

In no particular order, CT, Chicago, Dallas and SF are other big HF hubs in the US. That Jim Cramer comment scares me - the dude is an entertainer and charlatan, at best. Anything is possible. You just need to network and demonstrate passion. It's going to be hard, but I'm sure you knew that already. It will likely take you many months to break in, even if you're smooth as hell

5/30/12

How different is your work from the type of work you did at your bank?

6/29/12
GutShot:

How different is your work from the type of work you did at your bank?

I still read financial statements, build models, etc, but the work is extremely different in that I'm forced to dig very deep, try to understand something better than anyone else, and come to the right conclusions/predictions. I get paid on my results, not my effort. I have a lot more responsibility. When I say I talk to companies, I mean I sit in a room with senior management and/or IR and shoot question after question at them. I try to read them. I pay attention to body language, phrasing, how they answer, etc. It's not like banking where (1) you know your result before you do your work (let's shoot for an $x bn vauation) (2) I'm getting to a point where I'm very independent and rarely take orders anymore, unless a PM tells me to look for companies that support a certain theme he wants to invest in (3) I have free reign in the sense that I get to figure out how to approach something, what kind of work needs to be done, when I'm finished, etc (4) it's not about how many pages you produce, it's simply about the accuracy of your conclusions and the quality/reliability of the evidence you use to support them

I'm tired right now and waiting for someone to call me back, so I'm trying to jam out questions quickly. Apologies if they're a bit rushed-sounding. If I don't answer your question fully, just let me know.

5/31/12

Great Post! Its much appreciated

Cheers

5/31/12

Are there any legal restrictions on your personal trading account (assuming you have one) or are you free to do as you please?

6/29/12
LiquidDreams:

Are there any legal restrictions on your personal trading account (assuming you have one) or are you free to do as you please?

Can't trade individual equities. Have to clear any private investments with them, but that hasn't been an issue yet (have investments in two different early stage private businesses and they gave me no slack)

7/5/12
DontMakeMeShortYou:

I'd rather read something that would give me better insights into what drives a person's purchasing decisions, or how to interpret macro events more accurately, etc etc

magic words. (1) what books would you suggest? (2) and standing from a behavioural standpoint?

last, but no least, where do you dig? (3) i mean: if you are researching some new tech company (say solar energy), do you need to fully understand the technology itself or do you rely on some specific website/opinion[real ppl]/etc to get the idea of the profitability and obviously of where the market is heading? what is the level of detail required?

7/6/12
CrazyAnalyst122:
DontMakeMeShortYou:

I'd rather read something that would give me better insights into what drives a person's purchasing decisions, or how to interpret macro events more accurately, etc etc

magic words. (1) what books would you suggest? (2) and standing from a behavioural standpoint?

last, but no least, where do you dig? (3) i mean: if you are researching some new tech company (say solar energy), do you need to fully understand the technology itself or do you rely on some specific website/opinion[real ppl]/etc to get the idea of the profitability and obviously of where the market is heading? what is the level of detail required?

1) Blue Ridge reading list is a good start: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&sou...

Yeah, that's an ugly URL... direct DL at least.

2) See above. Beyond that... think about the things that would make you a better investor
-Understanding human decision-making... heuristics & biases.. etc.
-Understanding how to ask questions and read between the lines... management teams can be spin doctors/bullshit artists... knowing how to beat them at their own game is very helpful. Odds are, you won't, at least in the beginning, but as you practice and get better, you'll begin to pick up on cues, you'll get better at framing questions, etc. I read a book on how the CIA questions/interrogates people... very helpful. I've also just read plenty of articles on human behavior, picked up textbooks, and basically done anything else I can to understand it better

3) I'll try to find an expert who can explain it to me like a 5-year old (we pay these guys), and then I'll try to learn from there. I also question many people to pick up on inconsistencies, as well as patterns. The ideal is when you can understand how something works, but let's face it... I wasn't an electrical engineer, so I will never understand solar technology at a granular enough level.

Beyond that, I'll read anything from trade journals to online forums even. I'll compile all the info, reconcile/process, and see if I have a compelling conclusion

1/6/13

Would you mind letting us know which the book was on CIA interrogation?

Also you mentioned you're at a place where you're lucky not to have to do "channel checks, conferences, email note summaries" - did you mean that you weren't hired solely to do those or that you don't do those at all? Is that just because of the investment style of the firm?

5/31/12

Quick question: Do you see a lot of guys moving from AM/Mutual Fund (e.g. BlackRock, PIMCO, DoubleLine) to top HF's? It seems like a lot of the work would be the same but I wonder if this transition takes place frequently?

7/11/12
Hfhopeful:

Quick question: Do you see a lot of guys moving from AM/Mutual Fund (e.g. BlackRock, PIMCO, DoubleLine) to top HF's? It seems like a lot of the work would be the same but I wonder if this transition takes place frequently?

a) all three of those firms manage hedge fund strategies as well as mutual funds
b) people definitely move from places of that caliber to pure hedge funds but other, less-prestigious/well-known mutual funds would be harder to make the jump from.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.

7/12/12
Hfhopeful:

Quick question: Do you see a lot of guys moving from AM/Mutual Fund (e.g. BlackRock, PIMCO, DoubleLine) to top HF's? It seems like a lot of the work would be the same but I wonder if this transition takes place frequently?

this is pretty much my question as well. If you start in vanilla AM research associate position will headhunters/recruiters be interested in getting you in front of a HF interviewer?

have you come across any MF, AM graduate in the HF scene OP?

thanks a bunch

7/13/12
ChuckTaylor:
Hfhopeful:

Quick question: Do you see a lot of guys moving from AM/Mutual Fund (e.g. BlackRock, PIMCO, DoubleLine) to top HF's? It seems like a lot of the work would be the same but I wonder if this transition takes place frequently?

this is pretty much my question as well. If you start in vanilla AM research associate position will headhunters/recruiters be interested in getting you in front of a HF interviewer?

have you come across any MF, AM graduate in the HF scene OP?

thanks a bunch

Also very curious...

7/16/12
cheese86:
ChuckTaylor:
Hfhopeful:

Quick question: Do you see a lot of guys moving from AM/Mutual Fund (e.g. BlackRock, PIMCO, DoubleLine) to top HF's? It seems like a lot of the work would be the same but I wonder if this transition takes place frequently?

this is pretty much my question as well. If you start in vanilla AM research associate position will headhunters/recruiters be interested in getting you in front of a HF interviewer?

have you come across any MF, AM graduate in the HF scene OP?

thanks a bunch

Also very curious...

One of the big issues is the quality of the typical MF, AM, etc candidate. Where do most of the high achievers from target schools go? IB, PE, or something similar. Your typical entry level AM or MF class is naturally going to be of a lower caliber. Are HHs going to be clamoring to get at you? No, probably not. They only really go to bat for the top groups/analysts at BBs/elite boutiques.

However, you ARE in a somewhat comparable role (you're an investor) and if you are good at what you do and can impress HHs as well as network, there's no reason you can't get in. It's going to come down to the strength of your profile, recommendations, and ability to sell yourself.

5/31/12

first of all great thread, thanks for doing this.

I have a semi-specific question and I PMed you. looking forward to your response.

5/31/12

You seemed to indicate that they have a pretty strong preference for kids who know they want to do HF or bust, and are turned off by those who are open to PE too. Would this aversion extend to someone who took a PE job out of undergrad? More bluntly, is a candidate who took an analyst position at a reputable PE firm out of undergrad viewed differently than a typical BB IBD analyst?

6/1/12
wso1234:

You seemed to indicate that they have a pretty strong preference for kids who know they want to do HF or bust, and are turned off by those who are open to PE too. Would this aversion extend to someone who took a PE job out of undergrad? More bluntly, is a candidate who took an analyst position at a reputable PE firm out of undergrad viewed differently than a typical BB IBD analyst?

The kids who get into reputable PE funds (BX, Silverlake, etc) definitely have an edge on recruiting over IBD kids, however there aren't many of them. Also keep in mind that they typically sign on for 3 years--not 2--meaning they typically recruit with a full year of extra experience.

They have amazing backgrounds to begin with and also have more challenging jobs with an investing element, This leads to them having a better foundation to build on after their experience.

6/1/12
DontMakeMeShortYou:
wso1234:

You seemed to indicate that they have a pretty strong preference for kids who know they want to do HF or bust, and are turned off by those who are open to PE too. Would this aversion extend to someone who took a PE job out of undergrad? More bluntly, is a candidate who took an analyst position at a reputable PE firm out of undergrad viewed differently than a typical BB IBD analyst?

The kids who get into reputable PE funds (BX, Silverlake, etc) definitely have an edge on recruiting over IBD kids, however there aren't many of them. Also keep in mind that they typically sign on for 3 years--not 2--meaning they typically recruit with a full year of extra experience.

They have amazing backgrounds to begin with and also have more challenging jobs with an investing element, This leads to them having a better foundation to build on after their experience.

You also mentioned that people coming out from bridgewater, de shaw, and jane street would have a comparative advantage. what are your thoughts on big funds like sankaty and silver point where they do credit analysis and also recruit undergrads? do they have some sort of edge if they choose to recruit for HFs afterwards similar to that of the undergrads that get into reputable pe funds and the other hedge funds you previously addressed?

5/31/12

Thanks for taking the time, great post! its much appreciated.

6/1/12

If your an undergrad (junior) and have done some IBD internships in the past (not at BBs) but want to get into a HF after graduation - is this possible?

Networking etc helps?

As for personalities - you mentioned that people are more casual then in your banking group. What activities etc help e.g. sports or background e.g. FIG group help mould you into a useful person at a HF?

You mentioned most people are older - can you give an approx age range?

7/6/12
Charles-perry:

If your an undergrad (junior) and have done some IBD internships in the past (not at BBs) but want to get into a HF after graduation - is this possible?

Networking etc helps?

As for personalities - you mentioned that people are more casual then in your banking group. What activities etc help e.g. sports or background e.g. FIG group help mould you into a useful person at a HF?

You mentioned most people are older - can you give an approx age range?

It's possible, but highly unlikely. I'm sure you can find some chop shop, but the vast majority of good funds still tend to avoid hiring out of undergrand. You're simply not worth it for them at this point. They want you to at least develop modeling skills and some comfort with financial statements before taking you on. I spoke to this at more length elsewhere in the thread.

Backgrounds are all over the place... it's about personality... competitive, driven, intelligent, curious, logical, in control of emotions... there are more adjectives I can include but you get the point.

late 20s/early 30s for younger guys and late 30s/early 40s for more senior guys.

6/1/12

What would you say are the top BB groups/banks and top elite boutiques that you feel are most represented?

7/6/12
whartonite12:

What would you say are the top BB groups/banks and top elite boutiques that you feel are most represented?

Not going to start a prestige flame war, but generally speaking, and in no particular order, the following place well: GS, MS, EVR, GHL, LAZ, BX, and specific groups at JPM and BAML. JPM has 3 very good ones I think, whereas BAML has 2. Barclays nat res has a good reputation too. I'm disconnected at this point so maybe I'm missing some stuff. People, please don't start debating this... it's a waste of time. These are generalities at best. You can make it from elsewhere, but it's going to be more difficult. The top analysts in top groups are going to get the first calls. Others are going to have to work to stand out.

6/4/12

How old are you?

I think this is a question most people fail to think about when trying to figure out what they want to do with their life. It takes time to get to a point in IB.

6/4/12

Thanks for doing this!
What is the best way to prepare for HF interviews DURING banking?
Obv. being top-ranked and learning a lot is important but like do you think it is helpful to read some of the quarterly newsletters related to your targeted strategy during downtimes in the office? I.e. if you wanna go into value investing, read Howard Marks memos? I've been following some managers during college and read newsletters but i don't know if i'm going to have time to do that during IBD for obvious reasons.

7/6/12
Lubyanka:

Thanks for doing this!
What is the best way to prepare for HF interviews DURING banking?
Obv. being top-ranked and learning a lot is important but like do you think it is helpful to read some of the quarterly newsletters related to your targeted strategy during downtimes in the office? I.e. if you wanna go into value investing, read Howard Marks memos? I've been following some managers during college and read newsletters but i don't know if i'm going to have time to do that during IBD for obvious reasons.

Being top ranked and being able to demonstrate passion/commitment to HFs are the most important things. You help yourself with the latter by reading newsletters, books, writeups, etc. You'll have plenty of time in banking - I don't know what % of my time I worked, but I'd be shocked if I didn't spend 25% of my aggregate time doing nothing.

Other than that, understand how to think about a business from an investment perspective. Ask questions during deals. Pay attention to the bigger picture. Get your modeling skills up to par. Do a practice case study.

You're on the right path... ahead of a lot of your peers

6/5/12

Great thread. What is your firms thoughts on someone who went the PE route and wants to switch to a hedge fund after doing the normal 2+2 route (instead of going to bschool per say). Is it easy to come from PE into fundamental/value shops?

7/5/12
calisurf:

Great thread. What is your firms thoughts on someone who went the PE route and wants to switch to a hedge fund after doing the normal 2+2 route (instead of going to bschool per say). Is it easy to come from PE into fundamental/value shops?

You'll have a great shot. Plenty of shops out there that would love your profile. You're more mature, refined, etc, than 1/2nd year bankers... someone else has done all the grunt training with you and now it's time for them to teach you how to invest. Only thing that might give people reservations is: (1) why did you do PE and not HF before? are you really THAT passionate about this? (2) have you already begun to form investing views/mannerisms/etc? How moldable are you? Those extra 2 years make a difference

6/6/12

how easy is it to move from credit to l/s and vice versa, assuming the same size of fund and what does the credit guy need to prepare? thanks

7/5/12
Ricqles:

how easy is it to move from credit to l/s and vice versa, assuming the same size of fund and what does the credit guy need to prepare? thanks

The younger you are, the easier it is to switch. I don't know if this is true, but I've been told going from equity to credit is easier than the opposite. Basically, the idea is that it's easier to become more pessimistic as you become acquainted with debt, than it is to get rid of that Debby Downer outlook on the world that credit guys are famous for.

Can you specify what you mean on that last part? Are you wondering what a credit guy needs to do to prepare to switch to l/s?

7/5/12

Yes, sorry for not making it clear. I am looking at different oppos and I am wondering how different it is to go from credit investing to equity investing and what other areas I need to improve on to make the move. Thanks for the help.

DontMakeMeShortYou:
Ricqles:

how easy is it to move from credit to l/s and vice versa, assuming the same size of fund and what does the credit guy need to prepare? thanks

The younger you are, the easier it is to switch. I don't know if this is true, but I've been told going from equity to credit is easier than the opposite. Basically, the idea is that it's easier to become more pessimistic as you become acquainted with debt, than it is to get rid of that Debby Downer outlook on the world that credit guys are famous for.

Can you specify what you mean on that last part? Are you wondering what a credit guy needs to do to prepare to switch to l/s?

7/5/12

I would say if you're younger and this is your first investing gig, the transition is very easy. In both roles you'll learn how businesses work, what makes a good one and a bad one, how to read between the lines, what pitfalls to watch out for, how different scenarios work out, how to value a company, etc etc. You'll learn all the basics in the beginning and won't become too specialized until quite a few years out. Think about it this way: 2+2 (IB+PE) kids get into great HFs without any real investing experience. You, on the other hand, will have much more relevant experience and the fact that you'd be switching from credit to equity or vice versa won't be a big deal.

Ricqles:

Yes, sorry for not making it clear. I am looking at different oppos and I am wondering how different it is to go from credit investing to equity investing and what other areas I need to improve on to make the move. Thanks for the help.

DontMakeMeShortYou:
Ricqles:

how easy is it to move from credit to l/s and vice versa, assuming the same size of fund and what does the credit guy need to prepare? thanks

The younger you are, the easier it is to switch. I don't know if this is true, but I've been told going from equity to credit is easier than the opposite. Basically, the idea is that it's easier to become more pessimistic as you become acquainted with debt, than it is to get rid of that Debby Downer outlook on the world that credit guys are famous for.

Can you specify what you mean on that last part? Are you wondering what a credit guy needs to do to prepare to switch to l/s?

7/5/12

Great, this sounds good. Thanks for the help!

DontMakeMeShortYou:

I would say if you're younger and this is your first investing gig, the transition is very easy. In both roles you'll learn how businesses work, what makes a good one and a bad one, how to read between the lines, what pitfalls to watch out for, how different scenarios work out, how to value a company, etc etc. You'll learn all the basics in the beginning and won't become too specialized until quite a few years out. Think about it this way: 2+2 (IB+PE) kids get into great HFs without any real investing experience. You, on the other hand, will have much more relevant experience and the fact that you'd be switching from credit to equity or vice versa won't be a big deal.

Ricqles:

Yes, sorry for not making it clear. I am looking at different oppos and I am wondering how different it is to go from credit investing to equity investing and what other areas I need to improve on to make the move. Thanks for the help.

DontMakeMeShortYou:
Ricqles:

how easy is it to move from credit to l/s and vice versa, assuming the same size of fund and what does the credit guy need to prepare? thanks

The younger you are, the easier it is to switch. I don't know if this is true, but I've been told going from equity to credit is easier than the opposite. Basically, the idea is that it's easier to become more pessimistic as you become acquainted with debt, than it is to get rid of that Debby Downer outlook on the world that credit guys are famous for.

Can you specify what you mean on that last part? Are you wondering what a credit guy needs to do to prepare to switch to l/s?

6/8/12

How old are you?

7/5/12
KingJayk:

How old are you?

Not saying

6/17/12

How common would you say it is to start out (right from undergrad) on the buy side?

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is."
- Oscar Wilde
"Seriously, psychology is for those with two x chromosomes."
- RagnarDanneskjold

7/5/12
UncleMilty:

How common would you say it is to start out (right from undergrad) on the buy side?

Very rare. Top candidates tend to do PE out of undergrad, not HFs. Big HFs don't hire anyone unless extremely well-connected.

6/29/12

Hi,

Thanks for taking the time to make this thread. I've recently become much more interested in the debt/credit vs the equity side of valuation and I was wondering if you had any thoughts about what the best way to get into a credit/distressed debt hedge fund is? After reading most of your posts, it seems as though your fund is mostly into equities (unless I misread/missed a post that says you do credit), but is there a certain pattern in terms of experience that credit guys seem to have and how does it differ from equity investors' backgrounds?

7/1/12

To what extent do trading strategies developed by academic studies in accounting and finance influence your stock selection?

7/6/12

To add to that... I think the biggest reason I've started off on the right foot at this job--other than the massive number of hours I've put in--is that I will keep questioning something until it makes sense. Being consistently logical on the job makes a big difference.

7/6/12

Great post.

7/6/12

excellent posts so far! 4 questions...

1) What did you study in college?

2) Do you plan on going for an MBA? If so, what after that?

3) Will you go for a CFA?

4) On a scale of 1-5, how quantitative do you think you are? (1 being you avoid math as much as possible; 5 being a math freak/genius)

7/6/12
EuroStriker:

excellent posts so far! 4 questions...

1) What did you study in college?

2) Do you plan on going for an MBA? If so, what after that?

3) Will you go for a CFA?

4) On a scale of 1-5, how quantitative do you think you are? (1 being you avoid math as much as possible; 5 being a math freak/genius)

1) Finance/econ (to preserve anonymity)
2) No - HFs don't care about MBAs. Some even consider them a negative
3) No - waste of time/not worth it. No one cares about it on the HF side... I still don't know any HF guys who have one, though I'm sure they're out there
4) 3-4. Always loved math. 1-2 is fine in this job, though. You don't go beyond basic algebra

7/6/12
DontMakeMeShortYou:
EuroStriker:

excellent posts so far! 4 questions...

1) What did you study in college?

2) Do you plan on going for an MBA? If so, what after that?

3) Will you go for a CFA?

4) On a scale of 1-5, how quantitative do you think you are? (1 being you avoid math as much as possible; 5 being a math freak/genius)

1) Finance/econ (to preserve anonymity)
2) No - HFs don't care about MBAs. Some even consider them a negative
3) No - waste of time/not worth it. No one cares about it on the HF side... I still don't know any HF guys who have one, though I'm sure they're out there
4) 3-4. Always loved math. 1-2 is fine in this job, though. You don't go beyond basic algebra

In a scenario that your HF blows up (extreme case, I know), or you get let go, what do you see yourself doing? In other words, what are your exit opps?

7/6/12
EuroStriker:
DontMakeMeShortYou:
EuroStriker:

excellent posts so far! 4 questions...

1) What did you study in college?

2) Do you plan on going for an MBA? If so, what after that?

3) Will you go for a CFA?

4) On a scale of 1-5, how quantitative do you think you are? (1 being you avoid math as much as possible; 5 being a math freak/genius)

1) Finance/econ (to preserve anonymity)
2) No - HFs don't care about MBAs. Some even consider them a negative
3) No - waste of time/not worth it. No one cares about it on the HF side... I still don't know any HF guys who have one, though I'm sure they're out there
4) 3-4. Always loved math. 1-2 is fine in this job, though. You don't go beyond basic algebra

In a scenario that your HF blows up (extreme case, I know), or you get let go, what do you see yourself doing? In other words, what are your exit opps?

I don't think about exit opps anymore. If I got fired or HF blew up, I'd go to another HF. Beyond that, I could do pretty much anything one could do after banking or PE. Could also go into other asset management roles

7/6/12
DontMakeMeShortYou:
EuroStriker:
DontMakeMeShortYou:
EuroStriker:

excellent posts so far! 4 questions...

1) What did you study in college?

2) Do you plan on going for an MBA? If so, what after that?

3) Will you go for a CFA?

4) On a scale of 1-5, how quantitative do you think you are? (1 being you avoid math as much as possible; 5 being a math freak/genius)

1) Finance/econ (to preserve anonymity)
2) No - HFs don't care about MBAs. Some even consider them a negative
3) No - waste of time/not worth it. No one cares about it on the HF side... I still don't know any HF guys who have one, though I'm sure they're out there
4) 3-4. Always loved math. 1-2 is fine in this job, though. You don't go beyond basic algebra

In a scenario that your HF blows up (extreme case, I know), or you get let go, what do you see yourself doing? In other words, what are your exit opps?

I don't think about exit opps anymore. If I got fired or HF blew up, I'd go to another HF. Beyond that, I could do pretty much anything one could do after banking or PE. Could also go into other asset management roles

And if I couldn't work at a HF ever again, I'd start a business or go to a startup

7/6/12

First of all: Thanks for this topic, it's amazing.

However, I do have a question regarding HF recruiting:
I don't really get why HF prefer to recruit banking (question: only M&A, or LevFin & DCM too?) analysts. Everything you do at a HF seems to be very market oriented, so why would a HF recruit a banking analyst who has 2 or 3 years of experience in M&A? Just for the modelling part that is involved? In my opinion ER or AM seems to be a better fit for HF than IBD/M&A, or am I missing something?

7/6/12
above_and_beyond:

First of all: Thanks for this topic, it's amazing.

However, I do have a question regarding HF recruiting:
I don't really get why HF prefer to recruit banking (question: only M&A, or LevFin & DCM too?) analysts. Everything you do at a HF seems to be very market oriented, so why would a HF recruit a banking analyst who has 2 or 3 years of experience in M&A? Just for the modelling part that is involved? In my opinion ER or AM seems to be a better fit for HF than IBD/M&A, or am I missing something?

To put it simply: higher caliber candidates tend to end up in banking. Lower go to ancillary roles. Also, you really overestimate how much one learns those first 2 years out of school... you're not going to become a master investor when you only learned to build a detailed 3 statement model halfway through your first year, if even by then.

ER gets decent placement (for example, one of the best senior analysts here started off in ER). ECM and DCM are not recruited - capital markets desks don't do much modeling.

7/7/12

Thanks for clarifying!

One last question: Do you know anything about the HF industry in London? Is it different to what you see in NYC in some way (recruiting, fund size, way of investing etc.)? Anything special that one has to know about hedge funds in LND?
Or would you say that the industry is mainly the same, regardless of the geographical location?

7/8/12
above_and_beyond:

Thanks for clarifying!

One last question: Do you know anything about the HF industry in London? Is it different to what you see in NYC in some way (recruiting, fund size, way of investing etc.)? Anything special that one has to know about hedge funds in LND?
Or would you say that the industry is mainly the same, regardless of the geographical location?

Not really all that familiar with the HF industry outside the US. Know that the political environment in London has gotten increasingly burdensome and that there aren't quite as many funds/opportunities. Furthermore, quite a few US-based funds have closed satellite offices in London and elsewhere abroad. Rent is expensive and need a lot of scale for it to make sense.

7/7/12

Hi again, thanks a lot for the previous answers.

I was thinking about when the fund actually decides to execute an investment which path do you use? Go straight to NYSE and buy stocks? Or buy options/futures or through a Multi Lateral Trading Facility (i.e. BATS, ChiX, Turquoise) in order not to disclose your strategy to the wider public?

If you consider this question far reaching, you may as well not respond :)

Colourful TV, colourless Life.

7/8/12
Bonus:

Hi again, thanks a lot for the previous answers.

I was thinking about when the fund actually decides to execute an investment which path do you use? Go straight to NYSE and buy stocks? Or buy options/futures or through a Multi Lateral Trading Facility (i.e. BATS, ChiX, Turquoise) in order not to disclose your strategy to the wider public?

If you consider this question far reaching, you may as well not respond :)

Not sure what we do with the liquid stuff - rather not speculate and lead people astray. I do know, however, that we tend to use dark pools for some of our more illiquid ideas.

7/8/12

Quick question:
What about trading roles, in partiular equities and fixed income. (ie coming from a bb)
Thanks !

7/8/12
Canu:

Quick question:
What about trading roles, in partiular equities and fixed income. (ie coming from a bb)
Thanks !

What about the trading roles? Not sure what you're asking/looking to learn

7/9/12
DontMakeMeShortYou:
Canu:

Quick question:
What about trading roles, in partiular equities and fixed income. (ie coming from a bb)
Thanks !

What about the trading roles? Not sure what you're asking/looking to learn

Yeah sorry, I mean moving into the hedge fund industry after having worked as trader. How often does this happen ? Thx !

7/9/12
Canu:
DontMakeMeShortYou:
Canu:

Quick question:
What about trading roles, in partiular equities and fixed income. (ie coming from a bb)
Thanks !

What about the trading roles? Not sure what you're asking/looking to learn

Yeah sorry, I mean moving into the hedge fund industry after having worked as trader. How often does this happen ? Thx !

Answered something like this elsewhere in the thread. "Often" is a relative term. It happens - funds need execution guys, after all. Generally, however, I've seen more experienced traders come over rather than newbies.

7/8/12

So it's impossible to move from quant position (ST/AM at BB) to L/S fund?
Thanks.

7/8/12
flashmind:

So it's impossible to move from quant position (ST/AM at BB) to L/S fund?
Thanks.

No, not impossible. Some funds, including mine, have a small quant team (think we have 2-3). They help the PMs with exposures, look for patterns, etc. Not specifically familiar with their work - anyone employed in a quant role--even on the sell-side--would know way more than me. You're just unlikely to end up in an analyst role like mine.

I would imagine that you'd be better-received at a macro fund. Note: COMPLETE SPECULATION on my end.

All in all, I'd suggest doing some more research before being discouraged. I'll just say that, personally, I have not encountered ex-quant L/S analysts. Perhaps you could get around that by acquiring the skills necessary to do my job. Transfer to a more L/S-relevant role, then try to break into a fund? MBA? There are options when you put your head to it. Don't think a direct transition is very plausible though.

7/10/12

DontMakeMeShortYou - Thank you, I loved reading this.

7/10/12
thirdallnighter...:

DontMakeMeShortYou - Thank you, I loved reading this.

My pleasure. Wouldn't have gotten to where I am without WSO, so I'm glad to give back in whatever way I can.

7/11/12

This is an awesome thread with a wealth of knowledge. Prior to entering VC, I was an analyst at a mega HF and can confirm if your heart is not 100% HF and you are not entirely certain this is the career for you, I would really listen to Dontmakemeshortyou's advice. The mega HF I was at did not place emphasis on analyst involvement other than excel monkey, even if you came up with great ideas that seem to be truly valued at your fund. +1 for finding the right fit and emphasizing how crucial this is in recruiting and choosing the right fund, or else you will be completely miserable. Also, +1 on staying as "generalist" as possible, will make you the best analyst and will increase your value with funds and PMs.

"Jesus, he's like a gremlin; comes with instructions and shit"

7/11/12

Great read. Thanks DontMakeMeShortYou.

Posts like this give WSO its value.

7/13/12

I don't have a question, but DontMakeMeShortYou, thanks so much for the great thread!

7/13/12

DontMakeMeShortYou

Thanks for doing this. I graduated from an australian business school with first class honours in finance. I have 5 internships and currently work in equities research at a boutique firm. As you would be aware, the market is not the best for graduates and due to my location, i was immediately ruled out from BBs and management consulting firms; thus, my current career. I would like to eventually end up in a hedge fund and am wondering what my best options are from here. You stated that CFA and MBA really do nothing for you but in my case, would they help? If i got a top 10 MBA, would that boost my chances at heading into a hedge fund? Also, I have been investing for 6 years so thats where my passion is at. What would u do from here? (I have less than a years experience). i have a feeling that my chances dont look good from here..

7/16/12
UnclePanda:

DontMakeMeShortYou

Thanks for doing this. I graduated from an australian business school with first class honours in finance. I have 5 internships and currently work in equities research at a boutique firm. As you would be aware, the market is not the best for graduates and due to my location, i was immediately ruled out from BBs and management consulting firms; thus, my current career. I would like to eventually end up in a hedge fund and am wondering what my best options are from here. You stated that CFA and MBA really do nothing for you but in my case, would they help? If i got a top 10 MBA, would that boost my chances at heading into a hedge fund? Also, I have been investing for 6 years so thats where my passion is at. What would u do from here? (I have less than a years experience). i have a feeling that my chances dont look good from here..

Not qualified to answer this - no idea what the recruiting environment is like in Australia. Only reason I'd get an MBA is if you were otherwise unable to secure higher brand name experience. Being in ER is fine, but it's going to be a huge uphill battle coming from a small firm.

7/17/12
DontMakeMeShortYou:
UnclePanda:

DontMakeMeShortYou

Thanks for doing this. I graduated from an australian business school with first class honours in finance. I have 5 internships and currently work in equities research at a boutique firm. As you would be aware, the market is not the best for graduates and due to my location, i was immediately ruled out from BBs and management consulting firms; thus, my current career. I would like to eventually end up in a hedge fund and am wondering what my best options are from here. You stated that CFA and MBA really do nothing for you but in my case, would they help? If i got a top 10 MBA, would that boost my chances at heading into a hedge fund? Also, I have been investing for 6 years so thats where my passion is at. What would u do from here? (I have less than a years experience). i have a feeling that my chances dont look good from here..

Not qualified to answer this - no idea what the recruiting environment is like in Australia. Only reason I'd get an MBA is if you were otherwise unable to secure higher brand name experience. Being in ER is fine, but it's going to be a huge uphill battle coming from a small firm.

It is pretty much similar to the US and I am eventually looking to head overseas in the future. Might look into getting a top 10 MBA and moving to a larger firm but my concern is that I am worried that an MBA wont be enough because I only have boutique experience. What is your opinion on people moving from boutique firms + MBA to a larger firm. Does this happen often? Let alone, is it possible to get into an MBA program with a boutique name?

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