Alternative Paths to Activist Investing
Beyond the traditional route of a top IB role followed by a top PE role, are there any other ways to get into activist investing?
How common is starting on the shareholder advisory/defence side then moving over, starting in private credit, or lateraling from another HF?
I understand top roles at Pershing or Elliott pick from the traditional route, but I am more interested in the small to mid cap activist space. Thanks!
What’s driving you to look for alternatives beyond IBD -> PE? That’s going to be the cleanest way to move.
I’ve seen profiles from other funds (L/S and event strats) and some straight from banking though not activism defense groups. Seen one guy from private credit in Europe but that was a one off and he didn’t spend a ton of time at his fund before moving along.
Because I'd be joining a Canadian big 5 (RBC, TD, BMO, etc.) upon graduation which positions me poorly for a top US IB or PE
Will be very difficult. You don’t need a top IB / PE combo but you probably need some of the experience. If the issue is you don’t think you can convert IB or PE, activist hedge fund recruiting is much harder than both so difficult to think you can do that without being able to recruit for Ib or PE.
How does Special Sits at a MF fare into activist exits?
Bigger constraint is there are no more than 2 activist seats open each year. I'm always baffled how WSO seems to think this is a major asset class/strategy when it is incredibly niche-y.
If you like public markets, pursue conventional L/S HF. If you like to take control and drive change, pursue PE. Too many people wanting to do both and there just aren't many seats to be had.
The 2 seat challenge is definitely the case for the Icahn/Ackman/Elliott type seats, but is that necessarily true for funds with lower AUM operating with fewer people in mid/small caps? Perfect example of the scale I am talking about is something like Bluebell Capital Partners
10% of Ackman's positions are activist. Same for Elliott, Third Point. Icahn is near done. Sachem Head takes 1 position every 2 years. Again, wake up and realize this is a tiny tiny portion of the business.
And frankly, activism has a lot of the processy type of work that people hate about PE. Not sure why WSO so attracted to activism. I imagine people think it's cool to have control and "be agressive", when in truth you're probably spending hours with boring lawyers and consultants, all to hopefully come up with 1 actionable idea per year.
Nelson Peltz dropped out of Wharton, joined his dad's business, acquired new businesses, fixed them up, and sold them. Then started a fund doing so.
The seats rarely open up and when they do, we pick either a) the traditional candidate or, preferably, b) someone with IB and some buyside experience who’s clearly passionate and has been sending us one or two ideas a year. You’d be surprised how often the latter will get you a shot when a seat opens up.
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