Choosing a Seat in an AI World
I’m considering moving from PE to HFs. I have a typical BB + UMM/MF background and am slightly concerned about how AI could influence the type of seat I choose.
I think I’m better suited to a longer term approach (1+ year holds) rather than quarterly trading and I also like shorting, so L/S SM seems like the best fit.
My main concern is whether there’s a meaningful resource gap between SMs vs pod shops and long-only as AI advances. That’s why I’ve mostly been looking at larger funds (Tiger, Lone Pine, Coatue, etc.), but I don’t want to miss strong opportunities at smaller funds given how limited HF seats are.
Am I overthinking this? Should I hold out for larger SM opportunities or also consider MMs and long-only funds? Is there a SM AUM threshold where this concern becomes less relevant (e.g. $5B+)? I’m new to the HF world, so apologies if these are basic questions.
If your concern is "we need to be able to spend enough on AI as a part of our process to keep generating alpha", I wouldn't imagine that's a meaningful hurdle at any scaled fund. If you can pay millions to analysts you can pay millions for AI resourcing.
You should probably more concerned about finding a business that believes in the value add of the technology enough to spend the $ than the ability to spend the $ given your belief that alpha = f(AI spend) in the future.
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