Another MM v SM offer question
I currently have offers at both an SM and an MM. SM is newer/smaller with no name recognition, ~$2-3B in AUM, and down meaningfully this year. MM is your typical Citadel/P72/etc. I’m relatively junior in my career with no prior buyside experience, so I’ll be joining as an associate for both. I’m leaning towards the SM for the WLB and longer investment horizon but am worried about missing out on the structured learning, brand recognition, and coworker networking opportunities the MM would offer in case I want to switch jobs or industries further down the line, especially since I am so junior. Is there anything else I’m missing when evaluating the two opportunities? Thank you.
How confident are you in the SM? How sticky is the capital?
Joining for the WLB may not be a good idea if you end up getting fired or the fund loses a lot of investors. That would be my starting concern before even getting into learning, etc. The risk at a MM is also high but you seem to take job security at the SM as a given when it doesn’t sound like it is in this case.
Thanks for your input. Their LP base is relatively diversified and nobody at the firm thinks blowing up is a going concern, so I took that as it probably wasn’t likely. Not sure if I was too naive though…
I’d be in a dilemma too. There are a lot of SMs that are under the radar and have excellent returns and are well recognized within the industry. You said they were down meaningfully this year right, in all honesty, doesn’t matter but look at their 3Yr , 5Yr, and All time performance, perf over the long term will give you a better idea of the firm’s innate ability. The other question would be, how the SM would split carry generated from your idea as opposed to the MM. I’ve never been in an MM so don’t know how they work, but some SMs give you nice carry for your ideas while some SMs just give you a chump change bonus, but overall, working at SMs can either be very lax, or very sweaty. If your SM has a good manager, and since you are working under that person, you can go for SM if you think their skills can rub off on you.
What do you mean by carry for ideas?
For the ideas that you generate, you’ll be given a carry from the return they generate, In SMs with limited employees, there are at a lot of times blurred hierarchical lines, everyone can get a piece of the pie, eat what you kill.
Asking about getting carry for ideas as a junior analyst in a SM context is a pretty bad idea. This changes as you move into a more senior analyst seat with idea generation responsibilities but not a good idea as a fresh analyst and puts legitimate risks on your offer imo.
Also 20% is extremely unrealistic as that’s likely higher than the incentive allocation for the entire fund netting side letters and seed capital.
So, there is barely any performance track bc the fund is pretty new, which is worrisome. And nope, I’m so junior that it’ll just be chump change.
A new fund that already has billions is AUM?, well, I'd start digging around about the manager, his previous experience and performance. Where he's worked at before, what he generated for the previous firm etc. Because for there to be billions in a new firm, either the performance must be that good, or the connections. Is the manager a Viking/Cub? Or is he someone with a few decades of experience and got his clients that way?
Congrats on both offers.
Does the fund actually manage $2-3B or is this metric from RAUM filings you saw online? (These aren’t accurate at all fyi)
$2-3B in a core L/S equity product w no fee discounts and no LO product is pretty rare nowadays and not a ton of funds w that, especially w no real track record. Sounds compelling IMO depending on number of IPs/employees.
And as others have said, depends what down meaningfully means. If it’s >25% below HWM I would be hesitant to join.
I agree that it sounds like an interesting opportunity! But there is risk and I don’t want that to hinder me if I decide to move on from the firm. Down less than 25% but not that far off. Yes, that’s what I was able to garner from 13F & ADV, though I get that could be inaccurate.
sounds somewhere like an xn - not saying it is, but that class of fund (2-3b, no real track, presumably down materially on the year). would you personally take xn over the MMs?
What is an XN and why is it worse than a MM?
Given your background, age, and current market environment, I'd say take the MM
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