I'm currently at a PE firm thinking about transitioning to public markets. I'm up for VP / Principal next year so should be getting close to $600K total cash comp before carry. If I were to transition to a public markets role at a large HF, how should I think about my near-term and long-term comp trajectory? I'm sure a lot depends on market performance, but is there a baseline expectation for what I should get?
I don't have any public markets experience, but I'm obviously leaving a well compensated path to go to another role so the reward should be commensurate. For example, if someone did 2+2 and went to get an MBA and got hired by Viking / Elliott / Lone Pine, would they get similar comp as a 1st year VP / Principal at one of the large private equity firms or do they discount you given your background is not directly attributable to idea generation / P&L involvement right away?
There is obviously limited information on this topic given there are limited number of roles, but thought I would get community's help.
Given your current position and compensation as well as your expectations in the public markets I would run as far away from this idea as you possibly can.
This actually makes sense - unless OP really loves public markets and hates private mkts. Remember you can always enjoy stocks with your PA. I would stay more 5-7yrs in your seat and then manage own money, learning online (Vic, twitter), networking etc.
HF life is too volatile and sometimes unfair. Pretty bad comp if you don't perform vs. your current seat.
I generally agree, but i think the reason why I want to switch is that I don't like the private markets and I would like to get into a more research-intensive role. Private equity grinds you down given the uncertainty of deal dynamics and I'm at a point where I'm able to give up the idea of being in an industry with "secularly tailwinds".
If the only reason why you're in private equity is because it's a stable job, I'd rather take the risk and try out the HF world. If I don't like it, I'll find another job on the other side, but it's what I think I'll enjoy after 4-5 years of IB / PE. At the end of the day, if I stay for the "risk-adjusted" path to high net worth, I'll be miserable either way.
Elliott, Viking, Lone Pine type shops pay 500k-750k cash for people with 2+2 background. Ramps to $1-2m quickly if you're performing well.
Aren't there like 50 people max in the whole world hired for these seats (or equivalent places) per year - I feel like it just it isn't a helpful data point. I feel like the source is always something like: "my friend said this". Never heard anyone on here who actually had one of these seats. Not coming at your post btw, just thinking out loud here
50? More like 10-15 (and less if you exclude those going from one to the other, e.g Elliott to tiger or vice versa). Some don't hire every year
I don't disagree. He asked a question, I answered it.
What a terrible trade
I don't understand some of the pushback on this thread. At the top hedge funds, many if not most, analysts come from similar backgrounds as the OP. They are leaving those roles on the private side to go to comparable public opportunities. Comparing anything else is apples to oranges. The public funds that OP will likely go to isn't a bad trade as others in this thread suggests, which only goes to show that they don't have OPs background.
One would look at this thread and think I would be going to the mining / coal industry. It's amazing how the narrative has changed since late 2021 as a result of the markets. I'm not disagreeing with any of these points (i.e., public markets are hard, private equity has stickier capital from a structural perspective, etc.).
Agree with the post above mine. I'm not trying to go to some sub-scale hedge fund doing L/S equity, but my decision is to compare the economic trade offs from going to a well known hedge fund with a strong investor base vs. staying on the PE path and figuring out how to think about compensation going forward.
Separately, as someone on the inside of a MF / UMM PE shop, it's not as rosy as it seems. All of the crazy IRRs from 2020-2021 have been written down and it's unclear what the fundraising cycle is going to be. Even firms like H&F or Clearlake that have printed money for its GP over the past few years are underwater. Obviously this doesn't matter for the people that have ridden the wave up, but for someone at the junior level looking 5-10 years out, it certainly is a datapoint in the equation. People are extrapolating the strength of PE into perpetuity.
Agreed, mining not comparable. Mining companies have much more terminal value and multiple years of revenue leff
JK. But also note that those three firms you discussed are gold standards of industry. vast difference in joining tiger global vs random multi billion dollar HF as analyst xyz. The former makes way more sense than latter
I don't think there are many "random" multi-billion dollar funds, but maybe I'm wrong.
Comp after 2+2 or plus MBA is below PE comp after taking into account carry at a 2x return profile. I won't speak to specific firms, but a couple peers at my MBA and I are going to strong SM funds. Not Lone Pine or Tiger - idk if they pay more. Expect comp to be 500-800 in Y1 dependent on fund/individual performance. Scales to $1-2M by year 3 or so if you're good. My sense is that there's a class of people in the 1-2 range, then the 2-5 range, and then the top guys above that.
Talking down on a guy who actually has the credentials to get these looks is silly. If the question isn't relevant to you that doesn't mean it isn't relevant to someone like this guy. If you have the credentials and love public markets and are good then you'll have a shot at top funds (though any one individual fund is a long shot).
This is very helpful. I think what's interesting is how do you differentiate good analysts at the Y1-Y3 mark because at that stage, you don't really have significant P&L contribution especially at the Tiger Cubs or other quality SM funds. Do they judge you based on the strength of your research / analysis / work? I guess the question is that performance is fairly subjective until you're officially putting positions on so is being "good" similar to how you would get rated in a traditional PE setting? For example, a VP / Principal in PE might be "good" even if they don't do successful deals, especially because you have no idea on ultimate outcome 5-7 years out.
Maybe the key question is whether performance is easily quantifiable at that early of a point in a public markets career.
There are many good multi billion dollar hedge funds that are not tiger cubs. Tiger cubs are not the end all be all.
Agree it is interesting to see the change of views on this forum. It just goes to show the importance of independent thought and how that can drive differentiated outcomes over time.
Any suggestions or questions to help diligence a fund? Is it market to ask about structure LP capital / historical track record (e.g., LP letters or statements)? Are you able to ask about any lock ups to the capital? AUM growth split by organic and new money? References with LPs?
I think fair to ask about returns and capital base. Capital base: matters more for sub 2bn funds. Once you're at a certain scale, you're likely to be pretty diversified and quality so doesn't matter as much. Similarly, if you're smaller, you want to understand if the manager can scale and. fundraise. This is moot if you're talking to a $10bn fund for example. So it's all contextual.
I haven't heard of anyone ask for LP references. Not sure a fund would provide that to a new hire but maybe some people ask for this. I think it's more common to offer employer / employees references - former managers or people they managed.
I don't think the capital lock is that relevant for scaled managers. Reality is if performance is bad and people are pulling money, that's not going to save you.
If you're talking to an established fund, the only real things that matter are 1) how's performance and thus how durable is this firm 2) what's the PM like? What's his style, temperament and is he fair / generous, in terms of rewarding employees and allowing you to grow
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