Are HFs active in FIG?
Is the wider FIG sector (not just fintech) a good industry to specialize in if you want to work at a hedge fund later? How are the opportunities to generate alpha, compared to biotech/tech/consumer?
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In short, yes. Mostly in credit investing in regulatory debt tranches (eg Caius, Bybrook) but also equity L/S (eg P72, Citadel and others I don’t know about directly, these 2 I know directly). Clearly the opportunity set is small vs other industries you mentioned.
I've worked with a few PMs that covered FIG at various firms. In terms of opportunity, I would say depends on the fund mandate and how vast your coverage definition is. Some funds will include any form of deposit / fee / margin business which opens up multiple verticals e.g. auto / manufacturing co with industrial loan charters, healthcare benefit plan providers, tech buy first pay later, etc. They'll trade on different multiples and comp sets so not all funds include those, but sellside FIG groups should provide transferable skillsets in the least. You'll pick up the rest on the job.
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A lot of hedge funds trade FIG and there are a handful of specialists in the sector (the biggest being people like Junto, Samlyn, Endeavour, Azora etc). Ultimately, I think FIG is pretty hard. It's one of the most highly correlated sectors which leaves little room for dispersion unless you're playing something like insurance vs banks rather than liquid bank A vs liquid bank B. On the flip side, it's a highly specialized sector where relationships matter and the analysts tend to be pretty in-demand, especially by the multi managers since you can deploy huge AUM into financials
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