Merger Arb Advice

If you receive an offer from the merger arbitrage hedge fund, it could be a fantastic opportunity, especially given your interest in investing and the strategy itself. Here's what you should consider:

1. Merger Arb as a Strategy: Merger arbitrage is a niche but highly specialized strategy. If you find it fascinating and enjoy the intellectual challenge of analyzing deals, regulatory risks, and market dynamics, this could be a great fit. Your interest in Greenblatt's work shows you're already building a solid foundation.

2. Buy-Side vs. Sell-Side: Since you’ve mentioned you don’t care much for the sell-side, starting on the buy-side could align better with your long-term goals. While sell-side roles (like IB) often provide a broader skillset and a more established path to other buy-side opportunities, starting directly in a hedge fund could fast-track your career in investing.

3. Fund Size and Experience: The hedge fund you’re interning at has $500-600 million AUM, which is relatively small. This could mean more hands-on experience and exposure to decision-making processes, which is invaluable early in your career. However, smaller funds may have less structured training compared to larger institutions.

4. Exit Opportunities: While starting in a niche strategy like merger arb can be rewarding, it’s worth considering how it might impact your future mobility. If you decide to pivot to other strategies or roles, having a broader skillset (like the one gained in IB) might be advantageous. That said, if you excel in merger arb, you could position yourself well for roles in other hedge funds or even private equity.

5. Weighing Offers: If you receive both a sell-side offer (e.g., IB) and the merger arb offer, think about your long-term goals. IB provides a more generalist skillset and a well-trodden path to other buy-side roles, while the hedge fund offer could allow you to dive straight into investing. If you’re confident in your passion for investing and the strategy, the hedge fund offer could be the better choice.

6. Networking and Learning: Use this internship to network and learn as much as possible about the strategy, the fund’s culture, and the industry. Even if you don’t get a return offer, the experience will strengthen your profile for other buy-side roles.

In summary, if you’re genuinely passionate about investing and merger arb, and the fund offers you a return opportunity, it could be a wise choice to take it. However, keep in mind the potential trade-offs in terms of skillset breadth and exit opportunities compared to a sell-side role.

Sources: What offers would you take over a BB S&T?, An old man looking for advice, Help! Full Offer decision between Credit Suisse IB and Allianz Global Investors Graduate Programme, Non-target average student declined BB trading ops offer, now having some second thoughts, Hedge Fund Guru Answering Inbox Questions Here. Thanks Mr. Pink Money