Best path to a pod?
I’m an incoming SA at a bank that isn’t considered a top EB but still gets great deals every now and then and has a reputable name (Roths/Jeff/Gugg). I also come from a semi-target (Notre Dame, SMU, UT, Vanderbilt)
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Since getting my SA offer a year ago and since being extremely involved with my school’s investment club, listening to all sorts of podcasts, reading a few investing books, and speaking with professionals I have found that L/S equity is really where I want to be and would like to get there as soon as I can.
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It seems like the best place to begin in L/S equity is at a pod given the intensity and resources available to you (please correct me if I’m wrong). There aren’t many other students in my school going into IB that have any interest in L/S equity (or even public markets in general). Everyone just wants to do PE which doesn’t seem very interesting to me… So there isn’t a lot of HF recruiting infrastructure on campus.
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So that brings me to my question: what does the MM HF recruiting landscape look like for someone of my background? For instance, if I wanted to maximize MF PE options, I would likely need to get a full-time offer at a more prestigious bank. Is this similar for MM HFs? Do I need to worry about securing a different FT position in order to max my odds with the pods?
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I would really appreciate any insight!
Better bank gives better chances. Remember that working at Point72 or Millenium doesn’t really mean anything, you can and probably will be axed pretty quickly. The PMs that are good at making money consistently, and are fairly stable, can definitely have a preference on the “tier” of bank you worked at…
Thanks for the insight. Do you find that most pod associates do 2 full years of banking? Also, if you’re getting axed as a junior, is it most likely due to individual performance or PM performance?
Put it this way: the less you know about modelling and businesses, and the ability to tell me what a stock is doing next month now, the longer you’ll take to land a role at a good pod. I say good pod, not good podshop because it’s arguably pretty straightforward to get a gig at Baly or MLP. I’ve seen some pretty obscure banks there during my time, but are they working at a good pod? Maybe, maybe not.
And yes getting axed is because of pod blow ups, a PM hiring an analyst is almost always a type of negative selection. PM is either, new at the firm or at being a PM and needs to build out their team, lost an analyst for whatever reason or is expanding their coverage as they got more capital (see tech PMs who covered tech during their analyst years trying to carve out a strategy in telecoms because MLP decided to give more capital)
Some of these teams will thrive, most of them will not. I’m not saying the best PMs are elitist, but it’s not unheard of for a PM/team to tell bizdev to be especially on the lookout for resume from Blackstone, or PJT RSSG or whatever.
Wouldn't say pod shops are the best place to learn, though I am convinced they are the best place to get rich. Good SM for a few years then MM in a senior analyst / junior PM capacity is the best path in my view (though the good SM seats are obviously harder to land early on because there are a lot fewer of them).
For learning, you want to optimize for seat stability along with A+ quality mentors. SMs will typically invest a lot more in training (vs a PM who is busy grinding out P&L all the time) and have much stickier capital (virtues of having more than one customer) so you can really compound knowledge and learn a style of investing in depth without spending every day worrying if your seat will still be there tomorrow. There are some larger / more stable teams at pod shops as well that offer a similar feel. Plenty of time to apply what you know after to make the big bucks.
Do you think this view applies to the grad scheme programs as well? Like P72 Academy or Citadel CAP.
No, maybe to CAP given they don’t give you the same runway. I’ve seen people do the training and then not last long at the pods
You guys are all over-complicating it. I joined one of Citadel / Millennium after a year of consulting and have been here for almost 7 years. It was absolutely the best place to learn + grow up as an analyst, by far. I genuinely believe that if I grew up at a single manager / wasn’t covering 40 names + knowing every single detail on them + building out my process, that I’d be nowhere close to where I am today
The training of covering that many names and getting that many reps in and continuously getting better every quarter is best at the pods. Particularly when you layer in the tools and $ research budget you’re given. It’s not even close.
And obviously agree on the senior analyst / PM point (best place to make ton of $). But at the junior level where if we’re being honest, comp just doesn’t matter, the best place to learn is still the pods. Hands down. Happy to debate.
If you survive sure.
Do you feel like you got lucky with your pod? How representative is your experience of most that jump to a pod straight out of banking?
Also, what are your thought on my current IB offer (assuming I get a return)? Should I be recruiting over the summer with better banks for FT? Or are there diminishing returns?
Thanks for your insight!
Can you share a bit more on how did you manage to go from 1y in consulting to a MM? Very curious
Curious to how you made the jump?
The irony is that you are oversimplifying things. You are a statistical anomaly if you came from consulting and if you have been at the same shop for 7+ years.
Comp doesn’t matter because what you learn translates to insane late-career earnings?
Also I assume MBB with emphasis on M to get into a pod shop after just 1 year?
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Then how necessary is PE experience? My understanding is that most SMs prefer candidates with a few years of PE under their belt.
be a pea
In terms of advice-
1. get as many reps as possible from a modelling perspective.
2. be able to show them you are passionate about public markets and have been for years.
You can start recruiting as early as a year exp - most of them care about GPA/SATs at the Jr level so the better that is the better your shot is.
ACT and GPA shouldn’t be a problem. What are the general cut offs?
36, 4.0
Gpa 3.6 / ACT they don’t really have a cutoff but 30 or above is a solid score.
This for people that have graduated and worked for at least a year in either IB or PE btw.
Hey, to clarify, what type of modelling specifically would you recommend focusing on ? Is it just earnings projections or are there some pod/public markets specific types of models to look out for ?
1) Granular key driver revenue build
2) Cost build/EBIT(DA) bridge (price x volume)
3) unit economics tab
So what’s best path in? Did you prep an investment thesis on an industry or company and try to pitch the pod on it?
Obviously have stock pitches lol. They need to be actionable and not super long term
The reality is many pod PMs want GS/MS/JP M&A or similar experience + top 30 school + model monkey
Add to that Elite Boutiques and also peeps with 2 years in PE then yes.
To address the first question instead of debating the long-held SM vs MM debate, I think doing banking and then taking the liberty of trying to find and reach out to the pods BD folks while you're in your first 6-12 months in IB is the best way to tackle it. They're the gatekeepers and frankly don't think you need a recruiter to get you in the door, but that also could work too as there's an abundance of recruiters per pod seat.
For the debate above on Citadel/Millennium and training + growing up there in L/S vs. an SM, I've been outspoken before that it's just entirely nuanced to the person at hand. Citadel/Millennium are exceptionally deep on < 40 names and great at capturing spreads and trading into and around earnings. I don't really consider that to be the conventional definition for "investing" but they make up a large % of the market today so it'd be silly to ignore their importance. Most SMs who have been successful have likely incorporated some degree of a heightened focus around earnings as a result of this. The budget $ and access is great and all but tbh there are plenty of SMs that have done extraordinarily well with a fraction of the resources.
It is entirely up to you if you want to do the Citadel/P72/MLP route, and I won't discourage you from doing so. What I will say is that those roles are entirely PM dependent, everything from culture to work-life balance to comp and longevity revolves around your PM's ability to succeed. You can wind up in a killer seat with a guy who loves teaching and makes you into an all-star analyst where you can build a real career at these places, or you can find yourself in a seat with a PM who doesn't pay you fairly and struggles for both PNL and their ability to develop you.
It basically depends on what you want to learn. I do not think a pod analyst is necessarily a good fit for most SMs that are taking a view on 12-24 months. I do think most SM analysts could probably fit into a pod fairly well and learn that model pretty easily. The pod process is essentially force ranking a list and capturing the spread between your longs and shorts based on that list of your coverage. It is quite literally fundamental trading to a degree and takes a really deep focus on near-term R/R, which is phenomenal training in managing risk broadly. SMs will teach you more about valuation, investing, and more high-level material changes in industries that result in major swings in earnings and value.
Guys - let’s not hijack this thread so I won’t be responding beyond this, it kind of has nothing to do with what he asked.
Just don’t agree Herzy. SM people make it seem like their 18 month thesis is SO HARD to understand. News flash: the entire concept of variant views structurally can’t exist at a single manager. Just can’t. If you genuinely think it does, you’re lying to yourself. Single manager guys have zero resources that I don’t have access to, but I have plenty that you don’t have access to. It’s not hard to understand that. I know the debates around all of my names better than any single manager guy, regardless of duration, because it’s all I do. I work like 80-90 hours a week and have covered my names for years. Guys at Gladstone or Viking or whatever will share their variant views with me and I’m like “Okay? I’ve known about this for months it’s already in the whisper” and they’ll be all flustered
Yes Herzy, you don’t need to work at insert random single manager fund to learn how to invest beyond a 6 month horizon. It’s really not that complicated. We’re 2-3 steps ahead of you and think about “how will this data point influence the single manager or LO 2Y case?”
The simple answer is the pod analyst is just way more on top of all the debates than a single manager guy, which better be the case when you think of everything being thrown at them.
Saying that an analyst won’t learn about valuation / long-term thinking / business quality is not the right answer. I say this first hand.
You are correct that it’s pod dependent. But by the same token, it’s single-manager dependent too.
OP here
You both offer some great insight and I really appreciate your contributions.
My problem with the SM vs MM debate in my situation is that finding a good SM seat straight out of IB with my offer seems pretty unlikely (given my understanding that they tend to prefer PE experience. Maybe that’s just a Tiger Cub thing). So a pod seems to be the path of least resistance.
What are your opinions on what I should be doing right now and this Summer in order to give myself the best shot at a good seat (whether it’s at a good pod or a SM - doing L/S equity and learning is what matters to me the most). Should I be recruiting with top BBs? P72 academy? CAP? Or instead of recruiting for FT, use that time to model, learn about investing, work on pitches, etc.
Fwiw I’m always trying to come up with ideas and doing my best to find time to model. For the purposes of this thread, I’m less worried about how to perform well in an actual interview and more worried about just getting a shot at one.
Who is more annoying? The highbrow SM analyst that refuses to adapt to the current market structure or the pod analyst with a chip on their shoulder thinking they know their names better than anyone else b/c they work 80-90 hours a week and have corporate access / alternative data?
All fair points...
The point is the difference in mandate, less so one's ability or lack thereof to understand a thesis. Not saying the pod guy can't understand the thesis but he certainly is not operating with that thesis in mind. The pod is trying to extract alpha on a monthly basis, the variables that go into what the drivers for that may be are dramatically different than what the Viking guys are playing for. And frankly the weekly data is probably meaningless in terms of any material fundamental change to the medium to long term. It's not a variant view it's a difference in mandate - if I'm owning a name that you're short because the data weakened last week, I probably don't care about that data point and am not a willing seller because of it.
My bet is that while the data points may move the stocks, the majority of investors at SMs/LOs don't really care about it. And if they do then their mandates mimic the pods much closer than the bulk of the OG Tiger Cub folks that are looking out 18 months.
I'm saying this first hand at an SM with risk-adjusted returns well in excess of the pods fwiw... I'd argue my point in my response was that they aren't really playing the same game anyways. I don't care if the pod guys know all my names better than I do (they do) because chances are I'm going to own it in some form if my thesis is still in tact, the only changes I'm making are tactically around earnings if I'm bullish/bearish the near-term setup, but that's it. Unless I'm modeling for a huge miss in my biggest long chances are I'm probably going to own it regardless.
The point about working at a pod is that you AREN'T taught the LT stuff. You pick it up by virtue of covering your stocks in more depth, but the reps you're getting largely aren't expressions of any view that extends beyond 6 months. Not saying they can't do it but that's not what they're trained to do and that's not what the mandate is designed for. Sure you'll learn about LT thinking/biz quality but you aren't actively managing a portfolio that expresses those views.
Doesn’t matter. You’re all toast in the long run. Machines eating everything…and they work 189 hours a week on multiple names at once.
Found the LARPER
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