2022: Multi-Manager (Citadel, Point72) vs Single Manager HF (Tiger, Coatue)

Hi WSO, I have a tough decision to make and would be beyond grateful for your advice. I have SA 2023 offers for a top multi-manager HF (Citadel, Point72, etc) and a top BB investment bank (GS/MS/JPM). My end goal is to work in public markets investing. This is my passion and I am certain. The only reason I am considering the BB offer is that it provides broader exit opportunities to top single manager hedge funds (although the probability of landing an offer at top SM funds is near impossible either way). I am still deciding between MM and SM, but right now I am leaning towards the multi-manager structure. This is at odds with the conventional view of this site, so I am here to see what I am missing. Here's what I have right now:

Pros of Multi-Manager Hedge Fund

  • Refined and structured analyst training programs (Point72 academy, etc.)
  • Ability to run a small book as an analyst with direct P/L linkage (not always the case though)- Strong culture of analysts being promoted to portfolio manager whereas in an SM it is ambiguous/very unlikely
  • Quick progression: ability to become PM by 30 (have seen lots of <30 year old MM PMs on LinkedIn)
  • Big platform with lots of resources- I like their short-term investing style (trading around earnings, etc.)

Pros of Single Manager Hedge Fund

  • More job stability than MM
  • More generalist and therefore more transferrable skillset (work involves deep fundamental analysis)
  • The people here tend to worship SM, so more prestige

Currently, Bloomberg says YTD Tiger is down -44%, Viking is down -9%, and Coatue is down -15%. Meanwhile, multi-managers are performing much better (Citadel +13%, Millennium +6%). Is this a trend favoring the MM structure that should be considered, or is this a one-off year? Should I take the MM offer and run?

Edit: To confirm, my HF offer is from Point72

Comments (63)

  • Analyst 1 in IB-M&A
May 8, 2022 - 12:07am

Your question isn't MM vs. SM, it's MM vs. IB.

You'll find many previous threads about people asking the same question - the consensus is that doing IB offers much better opportunities both in terms of diversity, number and quality. People who do the P72 academy program may very well attend classes for one full year only to receive no offer in the end. Having no work experience, they're fucked.

MMs perform much better than Tiger cubs because they try to be market neutral whereas Tiger & co are just mouth breathers who went leveraged long on tech thinking that the bull run could continue forever. However, the performance of MMs is based on survivorship bias: the PMs who underperform will get fired mercilessly, and when a pod blows up the analysts also get fired. Would recommend to read the horror stories about MMHFs - getting fired is very easy, and if you get fired you'll struggle a lot to find a job after that. You may also get bored to play quarters, but having only worked at a MM, lateraling elsewhere would be very hard because you'd have no other skillset.

Take the IB offer and run.

  • Investment Analyst in HF - Other
May 8, 2022 - 12:49am

Thank you for your reply. I'll be upfront and say my offer is from Point72. I enjoy betting on myself and as a result, I embrace a high-stakes meritocracy like the hedge fund industry and the risk does not phase me. From networking with three different analysts there and from reading this site, Point72 has a 90% pod placement rate from the academy in recent years, and academy analysts are transferred to different pods in case of a blow-up. Also, my question is specifically about MM vs SM; IB would merely a stepping stone for me (I am a very particular person who knows what I want, and no other "exit opp" interests me--I am certain). Considering these factors, would your answer be any different? 

May 8, 2022 - 12:57am
dickthesellsider, what's your opinion? Comment below:

What the above said is very on point.

However, I sense you came into this convo with very strong preconception and you are merely looking for others to support your preconception ("confirmation bias"), which is driving you to state your case for going with P72 and hoping everyone to go along with it. In that case, it's quite futile for others to find it worthwhile to give you objective view. 

  • Investment Analyst in HF - Other
May 8, 2022 - 1:05am

Yes, as I stated originally, I am leaning towards MM. I posted hoping to see what I was missing, but it seems like the same tropes are popping up which I have already considered (risk of pod blowing up, pod placement rate, etc.). Pointing out these risks isn't too helpful for me as my contacts at the firm assure me they are over-exaggerated. Would love to steer the convo towards other factors I should be considering though-I am sure I am missing a bunch.

  • Analyst 2 in PE - LBOs
May 8, 2022 - 9:01am

Take into account survivorship bias when evaluating your contact's advice. If they are working there, most likely they have not been fired, so in their experience, the risk of being fired is overstated

  • Investment Analyst in HF - Other
May 8, 2022 - 11:49am

I will stand my ground here and say I was succinct. I already mentioned "leaning towards MM", "am here to see what I am missing", and the stability aspect of SMs original post. I held back on academy-specific points such as pod retention because I didn't want to out the offer I had. However, I decided it was worth clarifying immediately after these topics were brought up. 

  • Prospect in IB - Gen
May 8, 2022 - 1:07am

This is just an internship. Do P72, see how you like it, then decide from there. Banks are more than happy to hire you FT if you decide you want to do IB, making the opposite switch is also possible but more difficult given the lack of seats available. Most people on here are IB analysts so obviously they are biased towards their choice, or if they do work in L/S they probably did banking beforehand as these programs didn't exist. You know what you're getting yourself into.

You want to do it, it's a great program, try it out and just be honest with yourself at the end as to whether you still want to do MM investing or not.

  • Analyst 1 in IB-M&A
May 8, 2022 - 1:23am
:

Considering these factors, would your answer be any different? 

The thing is that by spending some time in investment banking, you'll be able to recruit for both MMs and SMs and have a competitive profile for pretty much any fund under the sun running a fundamental equity strategy. If you choose to start so early at a MM, your entire career universe will be composed of basically three to four shops - P72, Citadel, Millennium, and maybe Blackrock as they have an in-house HF.

Now as Dick said, you seem pretty enamored with the idea of working at Point 72 and suffer from confirmation bias - of course the people at P72 won't tell you that you can get canned 6 months on the job. That's quite risible since you don't know yourself if you'll be good at playing quarters - "grinding" won't make you better at trading. Having faced adversity in your life will have no effect on your P&L. Public markets make people humble. You will learn.

  • Research Analyst in HF - Other
May 8, 2022 - 10:52pm

Alright so this is what im hearing -- you like meritocracies, have no problem with taking on risk, and most importantly ENJOY the short term earnings trading style of research (which, from personal experience, most people find repetitive and tedious). The third point in itself is enough reason imo to take on the MM job – believe me it is EXCEEDINGLY RARE that someone in finance actually loves their job, and from what I've seen, those who do end up absolutely thriving. Talk to any analyst at P72 and they'll tell you that their PM works harder than they do -- but it's bc they are obsessed with the work.

You seem to have found a job that you would not only enjoy, but would also be good at (given what you said about seeking meritocracies and risk, i mean, at this point you sound just like the p72 recruiting pitchdeck). I cannot stress how incredibly rare of a combo that is... know that you're blessed and were made for this job. If you truly know yourself well and what you said is true, take the MM job and don't look back

  • Quant in HF - Other
Jun 2, 2022 - 11:27am

if you get fired you'll struggle a lot to find a job after that

Not really true, in fact I'd say most MM PMs don't find immediate success and bounce around 2 or 3 times before finding a landing spot that will put up with temporary underperformance (MLP is pretty consistently one of those places they get bounced from).

Controversial
May 8, 2022 - 6:57am
MacroJunkie, what's your opinion? Comment below:

Take the IB offer... If you go to P72, you're not even betting on yourself in the most important sense that matters (being fired/not fired). You're betting on whichever PM you get placed with after the academy. If he blows up, you're very likely out of job.

Even if you're 100% certain you want to go to a MM HF, there's literally 0 downside to doing IB first. If you get fired, it'll be a lot easier to move around afterwards. Plus, you might discover that you don't even like MM HF trading as much as you thought you might.

Finally, and this is something not often talked about on these forums, is that there's a reason why HFs hire from IB/PE. Understanding "how the sausage is made," so to speak, is an incredibly valuable skillset for someone involved with public markets. There's no way to replicate that experience at P72 academy because it requires you to have worked on the sell-side. 

  • Investment Analyst in HF - Other
May 8, 2022 - 11:27am

Would you recommend Equity Research over Banking? A couple banks are still recruiting for ER, so getting an ER offer isn't entirely out of the question. From what I understand, the nature of banking has become very transactional in recent years, and thus a good banker wouldn't necessarily be a good investor (even less so than a sellside equity researcher). I would like to specialize early, and would love to hear your perspective on taking risk earlier in my career (going direct to HF) vs taking risk later. 

  • Intern in S&T - Equities
May 8, 2022 - 12:29pm

If what you like is investing in the public markets, don't even bother with ER and go to HF directly

  • Research Analyst in HF - Other
May 8, 2022 - 5:49pm

disagree. banking is a waste of time if you're set on public markets . the only "sausage" banking teaches you is how to work 80 hour+ a week and align power points. all the hard "technicals" you can learn on your own if/when you need it. it's helpful only - as you pointed out - if it turns out you hate MMHF or markets but that doesn't seem to apply here

  • Analyst 1 in HF - RelVal
May 8, 2022 - 10:41am

I was in a similar situation to OP- took the Academy Offer and returned FT.

I would actually recommend working for an IB, on a risk, optionality, expected value level. The reason why I took the academy(which could be cope), was because I really didn't want to do IB. Unfortunately, I'm the kind who enjoys public equities, but has almost zero motivation for the sellside. So there while I would be happy to stalk through excel files to find weird data or hunt for the 2nd derivative of some obscure thing(just an example), I just cannot seem to align logos properly for IB, and would sometimes doze off in client meetings.

So I told myself that the delta in interestingness was totally worth it, but once again this could be a combination of cope and being spoiled.

But assuming that you don't have this problem, the objectively correct answer for the purposes of being at a HF is to do IB, and look for better seats than P72 once you have time.

Note: agree with the poster in one of the other comments that you sound as if you want others to support your decision, rather than look for advice. At the risk of sounding preachy, having this confirmation bias is a dangerous thing, especially when you want to work in a HF

  • Prospect in HF - Other
May 8, 2022 - 11:14am

What would be a better fund than P72 that would offer similar defined paths to PM?

  • Analyst 3+ in HF - EquityHedge
May 8, 2022 - 11:30am

PM is just a title. At SMs, (Senior) Analysts do run their own thing in the sense that they have trading authority within their little universe. Don't be married to the title of a PM. As someone who is in the industry and seen both sides of the equations, you may want to start at a SM HF just because they are a bit more forgiving. You learn from mistakes and are encouraged to stick your neck out there vs getting killed at a MM. That mentorship and encouragement early on goes a long way.

  • PM in HF - RelVal
May 8, 2022 - 1:09pm

Gonna play devils advocate here a bit. If you are passionate about public markets investing and want to immediately start building a skill set that will cater to that passion I'd suggest going the MM route. 
This may be an unpopular opinion, but the platforms offer the purest investing experience across the street and the skills one developed investing in a platform style should transcend market fads, cycles and the like. 
While it is true that if you are bad at your job you'll be easily sniffed out at a multi manager and cut, being at a single manager won't make you magically better at investing. Cycles and investor preferences shift and I'd bet my career that the next 10 years won't be nearly as great for the tiger Cubs as the last 10 years were. At least at a platform you are building an all weather skill set versus just being long levered tech and telling yourself you have edge.

  • Investment Analyst in HF - Other
May 8, 2022 - 1:27pm

Hi, thank you for your reply. Since your title says you are a HF PM, I would love to hear your take on whether you would hire (as an analyst on your team) a candidate from the P72 academy or a bulge bracket IBD program, all else equal. In the academy, I would build 20+ DCFs across industries, do on-site channel checks, learn coding, data analysis, etc and rotate around 3 pods. Why then is everyone suggesting that bankers would be more attractive candidates for HF analyst roles? Is there a certain skillset that bankers develop that you favor?It seems like M&A bankers are preferred even over ER sellside analysts for fundamental L/S, which I can't seem to understand. Is modeling pitch books for M&A transactions that much more relevant for public equities investing? It seems like I'm missing something big here, so I would appreciate your input.  

  • Intern in IB - Gen
May 8, 2022 - 2:53pm

You've drank the P72 kool-aid imo. Building 20+ DCFs, etc., all while learning to "code" in 8 months among a standardized class I fear isn't the hype that you imagine it to be. My friend who studied CS in college is roomates with a P72 guy and laughs at the notion that he's somehow much better off barely understanding data structures, etc.

M&A banking provides pedigree due to comfort in knowing the GS TMT kid is probably high caliber. M&A banking gives you access to understand the underlying strategy of companies, particularly sitting in on management calls, delving through private financials, earning a more intimate view of how companies seek growth.

Go to top the BB and recruit from there, imo.

Most Helpful
May 8, 2022 - 3:55pm
MMPM, what's your opinion? Comment below:

It is very rare to identify a professional passion at your age. You are lucky enough to have identified yours, and you have been given an opportunity to pursue it at a reputable shop.

To put that on hold and subject yourself to 2 years of soul-crushing IB work, in the hope that after that you will land the coveted Tiger gig.. I don't know, it's going to be an extremely frustrating 2yrs, and who knows if Tiger cubs will be as attractive going forward. 15yrs ago anyone here would have killed to get into Greenlight, and then the fund became a joke. The allure of the Tigers is not a given, nor eternal.

Go with what you're passionate about, try the P72 internship.

  • PM in HF - Other
May 8, 2022 - 5:21pm

Agreed, why do banking if you enjoy buy-side work, the only reason people will say on this site is exit opps. Those who worry about "exit ops" do not work longterm on the buyside anyways. 

Also I really disagree with the notion if you start at P72/CIG/MLP you will only ever work in MM. People on here have such a linear view of a career.

May 8, 2022 - 5:19pm
akdbs17, what's your opinion? Comment below:

What I would say regarding the above is that if you go through the P72 academy program, etc., it feels like you have limited control over which PM you get placed with and in which sector (the former of which is ultimately one of the most important things in your education as an investor). Also, unless you plan on staying at P72 as long as you can, it'll probably be harder to recruit out of the MM-world

You're young and should be more more risk-loving, so probably not the worst move in the world, but definitely pigeonholes you early

  • Research Analyst in HF - Other
May 8, 2022 - 6:07pm

In this thread: IB interns and first year analysts recommending banking, while 3 hedge fund portfolio managers say take Point72. I think the answer here is obvious.

  • Intern in IB-M&A
May 8, 2022 - 7:33pm

I'm only an intern, so take this with a grain of salt, but I comment this on every thread I see about someone opting to tread off the beaten path.

Go with P72. This is only an internship, so you get to test the waters and since you've been able to land an IB offer, you'll have no issue recruiting for IB FT.

Second, as another poster above noted, much of the advice is from people who don't have public equity experience. They are just regurgitating what they've seen on WSO about MMHFs and telling it to you. Eventually, optionality only goes so far and you're going to have to make a decision that is going to get rid of exit opps. For example, PE and VC firms that were more generalist and didn't have defined sector expertise perform worse and lose out on more deals than PE/VC firms that have siloed sectors. It is important to create a skillset that is unique to you, so that makes you useful and important. There's no better place to learn about public markets than P72 academy. Do you really think your exit opps will be limited if you don't get matched after 9 months of training? No. P72 is a premier brand name and I can assure you any sell-side ER shop will be happy to bring you onboard if worst comes to worst.

Thirdly, careers are not linear and banking will always be there. If all else fails, you can hit a career reset by doing an MBA and go into banking or something else. The IB experience really won't help you be a better public markets investor, so it doesn't make sense if you know that it's what you wanna do. The only synergies between banking and markets are the modeling reps and ability to perservere through working long amounts of hours in semi-stressful environments. The former can and will be taught through the academy. The latter will not help you succeed in being an investor.

Lastly, I am very familiar with the P72 academy program. These people are applying irrelevant adages to P72 academy analysts. If you come through the academy and your pod blows up, they will do their best to replace you or you can jump ship to another MM. They wouldn't invest 9 months of training into you for you to get fired 5 months later being on the job lmao, that's actually ridiculous if you say it out loud. Your pod blowing up likely has very little to do with you and P72 understands that. Yes if you come from 2 years of banking and 2 years of PE, you may get thrown out because you have years of experience and are expected to contribute. The same expectations are not placed on P72 analysts out the gate. Also, not getting placed in a pod should not be of concern. The vast majority of people get placed in pods, and the ones that don't either didn't want to be placed or were just egregiously incompetent, e.g. not showing up to work.

TL;DR take P72, you'll be able to recruit for banking FT if you don't like it

EDIT: Also, I think it's funny how people talk about how easy it is to get fired from a MM as if tiger cubs are going to keep poor performers long term. Yes, you might have a little bit longer leash, but if you suck, you suck. That doesn't change if you're at a MM or SM. If you're at a SM they'll just let you be a poor performer a little bit longer. This isn't PE where you can hide for years until it's time for your investment to realize. The reason why SMs are much favored on WSO is because the investing style is suited for a person that has done 2 years of IB and 2 years of PE. Many SMs give that age-old line "We like to take a private equity approach to the public markets, " so obviously people are biased to the 2+2 route. https://www.investmentexecutive.com/newspaper_/news-newspaper/a-private-equity-approach-to-public-markets

image-20220508195737-1

May 17, 2022 - 11:58pm
ShortStoryLong, what's your opinion? Comment below:

Totally agree. Know of a fmr analyst at a top SM HF (Lone Pine / Viking / Tiger etc) that got fired after a year on the job for making a bad call on a few stocks. Regardless of what style of HF you're at, if you suck or make significant mistakes, you're out. Need to stop perpetuating this idea that SM's having a looser leash vs MM HFs equates to tolerance for bad stock picking.

  • Investment Analyst in HF - EquityHedge
May 18, 2022 - 9:54am

No you don't. You look like your in college based on your posts and absolutely zero shot someone was fired within 12 months from Lone Pine or Tiger for a name they pitched coming from banking or PE… maybe if it was a compliance violation but outside of that it's never happened…

May 18, 2022 - 9:47pm
Anchor, what's your opinion? Comment below:

Do P72. What happens when you do banking, soul sucking misery and maybe you work for some asshole MD who blows up your recruiting with work or reviews or something and then you don't get a chance in the future. Take it now, it'll be more fun and you'll be a just fine if you want to switch to a SM later, these days the bias against MM is pretty rare, you'll get plenty of looks (if you've adopted a MM style as religion it may be difficult, but in that case you probably should just chase down that track.)  

May 18, 2022 - 10:33pm
Anchor, what's your opinion? Comment below:

Just a point worth adding here, a lot of the churn of PMs/experienced analysts at MMs is people who came from SM and couldn't adjust to the risk mgmt and workflow differences. From my experience, people who start in MM have a much better chance of making it up the chain, if your PM gets blown out they'll often promote the analyst if they've been around a while, if they just got there they'll try to find a role. Also - some of you guys need to learn what a high water mark is - wait 2 years and these MM seats might be filled with a lot of SMs that fell apart/shrunk/attritioned over the next few months.

Jun 3, 2022 - 3:21am
SpecialK, what's your opinion? Comment below:

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