Career Advice?
Hey guys,
Hope all is well. Was hoping to get some advice from some of the more tenured guys on the forum regarding some career advice in the HF space.
As some context, I have a non traditional background, and have spent 1 year in PE and ~3 years on the buy side in public markets. I also have a T10 MBA.
I’ve been at my current firm for a year now (sector focused, single manager, emerging). At first, everything seemed to be great - I was hired to focus on a niche investment strategy, but was later given the bandwidth to explore more traditional L/S ideas (which I enjoy). My coworkers are great, no idea was initially turned down, and given that I’m a “founding” team member at my shop, upside also looks great.
My ideas to date are roughly up 30% (inclusive of a few losers that went the wrong way).
For context, one of these losers was a short taken out by M&A, and two losers were given to me by my PM to cover (I initially disliked the names but assumed coverage because he asked me to). The two losers given to me have resulted in all my shorts being flat - as opposed previously to being up 10-20%.
Recently, I’ve been having the reins “pulled” back in. My PM essentially told me that he’d like me to focus on the strategy I was hired to do, and no longer wants me doing traditional L/S. I don’t have an issue with this, except for the fact that my pitched ideas and trades (in addition to my invested ideas), would have yielded returns of 45%+ , conservatively. The PM told me that later on I can potentially get back into L/S...at some point later.
Reasons for my PM’s conversation are my age in the industry (only 3 years of public markets investing experience), and the fact that my background isn’t a traditional banking/ER background. I don’t see the logic in this statement.
I honestly feel frustrated because I believe my firm is leaving money on the table by not listening to me. On the same note, I’ve noted that the head of the firm has changed his tone to be rather dismissive/condescending when he speaks to me. All of my pitched ideas (including the ones specific to my strategy) receive tons of pushback compared to other analyst ideas, and I feel like I can’t do anything right as of late to the satisfaction of the firm’s head.
I’ve lost a bit of morale, and I’m honestly reconsidering my future here. The opportunity seems great, but at the same time, I don’t want to work in a place where my ideas are tossed to the side - especially when they work.
Has anyone been in a similar situation? My goal is to make PM in 3-5 years, and I’m a bit unsure of how I should be thinking about my current spot. Should I start looking around to move to a MM or other firm? Should I stay put?
Thanks guys - I really appreciate your feedback in advance.
Bump
There are two issues here - first on your PM calling you away from L/S and second on your CIO being dismissive to all your ideas, L/S and niche.
On the first issue: Does your non-traditional background make you uniquely suited to tackle this niche strategy in a way that the other members of your firm aren't? Your PM could be wanting to get an additional less correlated return stream.
Other negative possibilities: Your PM blamed the 2 big losers on you and is getting pushback from CIO (assume this is what you mean by head of your firm) on why you are even allowed to do L/S. Or if CIO knows these were your PM's ideas, and all your ideas did much better, then PM doesn't want you to keep pitching L/S because it makes him look bad.
On the second issue: How have your ideas been stacking up against those of the other analysts? You told us the absolute returns, but is it possible the other analysts did even better, and are thus being listened to more? Is there anything about the way they pitch that is more compelling than your style? Maybe they started out worse than you did, but have improved so much that their pitches are now edging yours out?
Other negative possibilities: Your PM blamed the 2 big losses on you, and that lowered your standing in CIO's eyes, and he is now extra wary of anything you pitch. Or maybe your firm lost a bunch of money due to covid and they are thinking of shedding costs by nudging you out the door.
I think your first step should be to have a convo with PM/CIO and say hey I noticed my ideas aren't getting as much traction as they used to, anything I can do to improve?
Simultaneously you should also already be interviewing at MM funds in case that convo goes south. Your non-traditional background will in no way hurt you there, all they care is whether you can make pnl. There aren't a lot of politics between analysts in a pod because you just have a 1:1 relationship with your PM and he either puts on your ideas or not. MMs also tend to always push more idea velocity so any good ideas you have are less likely to be dismissed for political reasons. Downside to that is your fate is in the hands of a single person...
MMs prize sector expertise above everything else in their equity business. It doesnt sound like he brings that type of experience, so he is unlikely to find much traction there.
Agreed - by no means have expertise per se, but have 1 year of focused experience (100%) on the sector and 2 years of semi-focused experience there (70-80% at my prior fund). Not sure if this is meaningful at a MM.
Hey thanks much for your insights. My background is helpful in my sector focus, but realistically speaking, I'm "the" analyst for this strat. The other guys/gals are familiar with the investment strat, but it's really me and the PM running it.
Regarding your second point, I've considered both situations, and I feel as if both of these points are valid. Either way, seems like a lose-lose for me.
On the second issue, I totally hear you - I'm the least tenured guy on the team, so the other guys essentially pitch ideas - and immediately get a go ahead. They simply have more industry experience and more years on the buy-side - and hence, understand a lot of intricacies in covered companies. They're honestly pretty good at their jobs, but I think their main advantage is just a built up knowledge base spanning decades of investment experience.
I don't think I have to worry about being nudged out the door, since capital isn't a problem, and to my understanding, returns have been solid even through the Pandemic.
I spoke to my PM about the issue, and he essentially told me he wants me focused on my strategy (no other context there). I tried pushing him on this point but essentially got nowhere with the discussion. I'm considering speaking to the CIO to figure out what I did to slight him - but b/c we're a single manager, I feel as if that's a moot point on my part. Also unsure how to proceed here since there are 3 of us involved in this dynamic (don't want to piss off the PM by speaking to the CIO, etc.).
I appreciate your point about MM - hadn't really considered it until now, but doing some serious thinking about it.
To echo the comments of the above poster, it sounds like there could be a communication problem between your PM and CIO (if indeed there are three distinct parties in this matter, including yourself). It is possible that your PM really never communicated to the CIO that you took on L/S duties, and then this blew up in a "why is he even doing that?" way when some position losses within that strategy were blamed on you.
FWIW, I have been in the spot of having positions of others handed off to me when things go south. I've never been held responsible for the initial markdown, but subsequent losses (or gains!) are on you. Although I think, politically, this sort of dynamic between analysts and having responsibility for their coverage move around like that never ends well and is unfair.
The other issue could be that, again as the other poster mentioned, the niche strategy you were hired to do is actually more important than maybe you realize. Perhaps when you were hired the PM/CIO expressed an interest in building out that niche strategy, but excluded the fact that he may have marketed a certain exposure / return potential of the niche strategy to your investors. If that is the case, then your focus on the L/S side could be interfering with that plan and nobody wants cranky investors saying "hey I thought you were going to be doing more of X?". It is also a bad situation for you if your niche strategy has been performing better than L/S and your attention has been away from it. Sort of leads to the same problem. Although again I think this is a communication issue between the investment team members. As a sole analyst focused on a niche strategy, that no one else knows or can do, you actually sort of have to take on "pseudo" PM responsibilities in the sense that you should have an idea for when the most opportune times to deploy capital are and how much you can scale up that book given an environment. So it is your job to manage expectations of your PM/CIO in that regard. If the environment is not good for your niche, and you've properly communicated that to the team, then I don't think they should have a problem with you doing other things. I actually say this as someone who also has sole coverage for a niche strategy as part of a broader multi-strat effort. It is a very opportunistic strategy where you can either deploy $0 or $100mn into the market given the environment, and I've also had to manage my PMs expectation and learn to say "its just not gonna happen right now" when he asks why we aren't adding exposure.
Hey thanks for the feedback. I don't think it was a surprise by the CIO that I was doing L/S, because the CIO listened to all of my shorts and "OK"ed them - and my picks accounted for ~60% of the short book (with a lot of them working).
To your point about the handed off positions, I have a strong feeling that this is what's driving the negative sentiment by the CIO - but I have yet to broach this topic with him. Regardless, I really don't see him as caring honestly. It's unfair - for sure - and I'm not a fan of the situation.
I think your point about the niche strategy is 100% spot on (and you clearly know this from working on one yourself). Again, to your point, the PM actually asked me to pitch L/S prior (which I did), and then had the "pull in the reins" conversation that was discussed above. The strategy I focus on tends to outperform traditional L/S on an objective basis, and you're right - I do need to assume a pseudo PM responsibility here.
I think setting expectations is extremely important for sure - and I thought the CIO knew the ins and outs (my PM certainly does), but to your point - if I can handle both the strategy and L/S, I feel like a more efficient use of my time would be to do both (pending adequate capacity)? Just my thoughts? But may be looking at it completely wrong.
Being a manager myself, it sounds like your PM just needs someone to be focused 100% on the niche strategy, as opposed to spreading their time across both the niche strategy and l/s strategy. In the end, they have other people to work on the l/s strategy, so they don't need you to spend time on that. It's honestly more of a resource allocation issue than a performance issue .I think you are over-reading the situation.
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