I want to eventually, one day, start a hedge fund that is a value fund. However, before that happens, I need to work somewhere where I can build a network and, hopefully, improve my investing skills.
This is why I am posting this question. Out of all the possible possibilities out of college (I say possible because it is not possible to just work for a fund right out of college in all likelihood), what is the best one to improve my knowledge of business, finance, and investing. Is I-Banking really the best thing?
I ask because I am not sure how much bankers actually understand business. Sure they can look at a financial statement and say company x earned y. But to actually understand HOW that number on that paper came to be, to be able to visualize how the business works, that is really what one needs to be able to do to be an investor.
So out of the possibilities after college- banking, consulting, s&t, etc- what is the best to actually become a better business thinker?
Working in industry in a top rotational program probably or consulting as a generalist or in house. ER knows companies in depth, but hands on maybe the best way AM also is good.
Interested in this as well.
Who says you can't work for a fund out of school if you want it badly enough?
Well, value funds usually don't have many employees and usually don't hire people. Many are a one man operation.
depending on how solid an applicant you are, how hard you work and what school you go to there are definitely one-off opportunities to join top hedge funds out of undergrad. There also are several major asset management firms that aren't exactly value funds, but will also give you a lot of experience/education. (Klarman learned the ropes at a mutual fund company). In my opinion that is a better route for starting your own fund than banking or even ER...ultimately you'll be doing buyside research. Note that I'm biased, I work for one of those AM firms.
I'd start finding people who work for those types of firms that are alums and ask them questions. ( I wouldn't tell a potential future employer that you want to start your own fund though...)
So if you were me, would you guys go for the "standard" route of working for a "prestigious" place like Goldman IBD, or would you go for an offer of working for a small fund, like 50 to 100 million?
This is so naive its crazy.
Every VP or MD i met could sit on a table and talk face to face with management about more than numbers.
And here comes the trick: they can do this after initial preparation for various industries not just one.
dont understestimate the strategic component that M&A entails. esp. on the senior level.
I understand your point on the junior level but even there... what other jobto gian more onsights on a range of industries?
while the OP's point is a little naive, this isn't about what VP's and MD's know, it's about how much you'd learn as an analyst in banking about investing and I don't think the point is that ridiculous.
Regarding the option between goldman IBD and a tiny value fund that's a hard question even given your goals. With 50m in assets I doubt a fund could pay you decently. If it were between goldman IBD and a 500 mil fund that might be a more fair question and honestly the answer is going to depend on a few things: 1) when you start this fund, will you need to find investors? - then you need some branding and I don't know if you'll have it from a 500 mil fund unless you're talking to family/friends/etc 2) how good is the fund? - if it's a great fund and the PM seems really interested in mentoring you then great, but it's a risk that the fund blows up.
If you perform really well in banking you can probably get a job at a good HF and hopefully learn stuff there, but my advice would be shoot for a Fidelity-type place. You'll start learning how to analyze and value companies right out of college and the brand is definitely strong enough to go a long way. Also, if you're a performer you can probably get a HF job as well.
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