Personal Account for HFs

I have never traded on a personal account, although I dabbled with options and stocks on a simulator for a while. I'm starting FT IB work at a BB this summer and I might be interested in working at a hedge fund instead of PE.

I don't really have any cash to throw around in the debt/equity markets, although I could always invest in a simulator.

How important is personal trading when doing HF recruitment? What about for credit/distressed debt/special sit HFs? Would those be more forgiving than a long/short fund of people who didn't have personal investing experience?

If it is very important, how can I get started with it in the month or so that I have before I start work, or is it too late? Do a lot of people lie about personal trading experience?

 
Best Response

I recently accepted a job with a HF and part of the reason why I was offered the job was due to my personal investing, which to the firm showed that I was actually interested in the markets on a personal level. I actually put a screen shot from my online broker of my portfolio holdings at the back of my CV so people can see the names I hold and how much I have in play. Because I follow a specific strategy and am able to talk about all of my holdings this made my interviews with various funds much more "conversation like". Most of my interviews just started with a PM or analyst asking me about my holdings which turned into a back and forth conversation about investment strategy and allowed me to show them my way of thinking.

 
Ovechkin08:

I recently accepted a job with a HF and part of the reason why I was offered the job was due to my personal investing, which to the firm showed that I was actually interested in the markets on a personal level. I actually put a screen shot from my online broker of my portfolio holdings at the back of my CV so people can see the names I hold and how much I have in play. Because I follow a specific strategy and am able to talk about all of my holdings this made my interviews with various funds much more "conversation like". Most of my interviews just started with a PM or analyst asking me about my holdings which turned into a back and forth conversation about investment strategy and allowed me to show them my way of thinking.

Ha nicely done.
 

I think putting your own money to work in a PA is very important. In all of my interviews it was a huge topic of discussion. The more experience you have, the better. So put money in as soon as you get a little FCF, but if you miss your "1-month window", don't sweat it (but don't think that just b/c your're working a lot at your new job that's an excuse to not get invested). HF with strategies that don't cater to the retail investor won't expect you to have direct experience in that strategy, but general investing experience will be helpful.

If you don't know what strategy you're most interested in, cast your net wide at the beginning and think of yourself as a multi strat fund, looking at credit, L/S equities, etc. That will go a long way in your interviews and help you know where you want to end up.

 

Having enough interest in investing to experiment on your own (small dollar amounts is fine and expected) is a prerequisite to working at a fundamental l/s shop. I would not even interview you without it. What would we talk about? If you can't bring yourself to make investing a hobby, why would you want to do it 12 hours a day? That said, it's never too late to start.

Edit: if compliance prevents you from trading altogether (most banks just require pre-clearance or a holding period restriction though), active use of a simulator would be fine. You should be able to speak knowledgeably about your investment philosophy and ideas in an interview, and really the only effective way to develop those is through experience.

 

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