Since there has been so many threads of big payouts at Hedge funds, would love to hear any stories of the inverse - where analysts or even partners/PMs put on very profitable trades and were really underpaid at YE. Helps frame the reality of the industry
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Why dont we not talk about +2 or -2 std deviation events and just talk about EV(X) for a role and how to maximize that?
Let's say the role is analyst @ $5bn+ HF (top non-tiger cubs, so maybe Whale Rock, Abdiel, Light Street, Altimeter, Eminence, Holocene, Melvin etc) at age 26, and you become a PM when you're 32 -- would EV look something along the lines of this?
Analyst years: $250k (in "eh" year) - $2m (in blockbuster year) --> a few $300-500k years with the occasional low 7 figure year
PM/Partner years: $1m (in "eh" year) - $10m+ (in blockbuster year) --> $2-3m a year with the occasional high 7/low 8 figure year
Play the game until you're 40 or so, and you could be worth $15-30m. That's a hell of a career imo. Maybe you had like 4 blockbuster/outlier years total over your time at the fund (2 as an analyst, 2 as a PM). How max(EV)? Invest your earnings in the fund and perform :) At places like Light Street, Abdiel, and Melvin (with the exception of 2021 for Melvin lmao), they seem to have blockbuster years all the time so that could also make a huge difference
Jesus Christ I was being sarcastic lol
Stop with the comp math it gives me literal aids
This is the +2 std dev outcome for people who enter the HF industry in mid 20’s. For the other 95% it involves disappointing bonuses, frequent seat hopping, long stints of unemployment and undesired career changes in many cases.
You are almost certainly not going to work at Light Street or D1 so maybe don't worry about it until they call you lmao
Analyst 1 and Analyst 2 in cash equities at a BB got $0 year end bonus, no raise. Year End 2020
Crazy comp story on the downside might just be a person getting fired and/or sued by their employer for money that the employer claims the employee owns them. I think I heard a story of an employee being let go / terminated by one of the major PE/HF/buyside firms and then that employer suing the now former employee for damages or to stop them from working again in the industry for a while
No sir that is not how finance works.
late response but probably referring to the ex-apollo partner who was sued by apollo for reasons you can google online. he's now running a portco for sixth street i believe but not sure
I worked at a hedge fund and my target compensation was 200 base + 200 expected bonus. I received zero bonus for two years in a row. But don’t worry boss said to focus on the long term.
So did it eventually work out after 2 years??
Know a guy joined a firm was told 3% could happen if desk made like 50mm as an exaggerated example. They made 2-3x that # and was paid 50% above his guarantee.
I think the last 3 years the trend I have seen firms want to give better salaries to analysts/jr staff to prepare them to be shafted later.
It's possible for analysts to be fired near the end of the year and get zero bonus due to that, even if the fund performance was decent. A few firms seem to be notorious for it.
It's much easier to give someone a low bonus and have them quit than deal with firing them. Says more about the analyst than the firm - they aren't doing this with people they actually care to retain.
It's actually somewhat common in SM quant funds. These funds can be run like big corporations and plan their annual layoffs near the end of the year, so it's convenient for the managers to get rid of people at that point.
Not sure if you have experience with this, but as someone who has had to let people go (with and without cause) I can tell you it isn’t an “easy” thing to do (you should ask you legal dept). The risk firms run by firing people before their bonus pay is much higher than giving a low bonus to poor performers, and if the person isn’t a poor performer and you are firing them to avoid paying bonuses, good luck. You open yourself up to reputational risk and legal risk. As much as people on this site like to say “at will employment” or “your employer will f you over the first chance they get”, it isn’t like that in the “real” world. It is much more complicated.
That has not been my experience, or that of several others I know (and this forum and Glassdoor have many accounts of it too at various firms). It may be more of a quant thing. People are technically not fired but their job is eliminated, with a severance that is much less than their bonus would have been. In fact, some firms plan an annual layoff round near the end of the year for just this purpose, and they may create a new job the next year and hire someone else. This is common in many big corporations outside finance as well.
I don’t mean this to be insulting, but if that is happening that is usually a sign of bad performance of the analyst as opposed to some “bulk firing” that firms do every year. There are a few reasons I say this:
1) reputation - it becomes a lot harder to hire “good” employees if you are churning through many people each year AND screwing them over. Many funds have high turnover, and I understand that people are biased to think that even if others failed you’ll crush it so you take the job, but if you see people not getting bonuses, that changes the story.
2) legal exposure - it becomes pretty hard as a firm to defend “eliminating” jobs every year and then rehiring for the same role and screwing people on bonuses. The closer you are to bonus period, the more likely firms are to cover this. You should ask your friends who have gone through this whether they got any bonus covered
3) retention and development - it is much harder to retain talent if you are a firm that constantly screws people over. Believe it or not, the “junior” employees are not where you are getting a lot of value, most employees (even quants) are negative ROI for a while, and the more senior people have serious protections against getting “fired” (or job being eliminated). So by firing a bunch of people, senior people may want to leave (concerned firm isn’t run well) and hiring new talent becomes tough.
Anyway, I’m not saying you didn’t have a bad experience (or bad luck). But I think you are generalizing a bit too much. I’m not sure how long you’ve been in the industry and with which firms, but I’ve seen many of the top firms (including quant firms) including working in the industry, having senior employees as friends, etc and I don’t see this in the places I know.
Yeah just ask Credit Suisse
Heard from a friend that JAT did this to a couple guys last year despite being up. Brutal.
Know a guy who received close to no bonus for 3 years while more senior people at least received token sums. PM cited various reasons, fund/team was not performing, guy was new and had not contributed enough, etc. He quit in his third year. The following year was the fund's best in a decade and he heard that everybody in his team received at least 500k in bonuses.
1) Know a guy who declined a post-MBA offer at Elliott to be the right arm to the head of a FO (equity L/S).
Performed poorly at the FO for 3 years, got $50k bonuses each with a low base, then moved to a mid-market PE.
2) Senior analyst a leading EM SM HF got his core position -80% for the year (5-10% of the portfolio) following a law change that killed the biz. Got fired w/ 0 bonus.
What was the Elliott comp like
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