Credit —> Equity
I’ve used GPT for this post because my writing is not understandable. This is based on the other post about moving from special sits to equities but really just about the background of people being taken. I’ve been working on the opportunistic credit side at a top-tier shop for the past year, but my long-term goal has always been to transition to a top equity SM HF. In speaking with a number of professionals across both public credit and single-manager equity hedge funds, I’ve noticed a clear shift: the traditional route of two years in banking followed by two years in private equity before joining a leading SM HF isn’t as universal as it once was—outside of a few exceptions like Pershing and Viking. Increasingly, these funds seem to be prioritizing candidates with a track record of navigating highly complex situations, which often come from the non-investment-grade credit world. While I recognize I might be inclined to see a pattern that works in my favor, this trend does seem to be genuinely taking hold. Thoughts? Am I completely wrong?
Bump
I don't think it's any more true today than it was in the past. And the transition from distressed to public equities is becoming harder and harder
Why is that
Both have become less about long term fundamentals to an extent - it still matters over time but the day to day skillset necessary to succeed requires much more. Public equities has become a shorter duration product where you need to have a sharp view on the quarter (even if not trading it) while distressed has become increasingly litigious and process-oriented. This isn't new but both continue to move more in those directions. The skillset required to become a PM/MD doing distressed is vastly different than what's required of a L/S Equity PM.
"the traditional route of two years in banking followed by two years in private equity before joining a leading SM HF isn’t as universal as it once was"
What are you talking about? if anything, it's been the last 5-10 years that that has BECOME the hyper traditional route. Prior to 2015, you had a much better chance of joining one of these funds from paths different from that because the hiring process at HFs was less formalized and they'd be into people from different backgrounds as long as you articulated a cogent investment thesis for public equities.
Like Ackman touted often how he once hired someone at Pershing who he "met in a cab" - that isn't happening in 2025 lol.
Others have said parts of this but worth echoing: the idea that there is a 'path' to a hedge fund is both a (relatively) new development and one that is more entrenched at larger, more institutional firms. If the dynamic works in your favor, great. If not, there are lots and lots of HF out there and each one is as unique as the next, especially in terms of hiring and once you are out of that large institutional category.
Couple general thoughts on your characterizations of different strategies: First, the basic analytical toolkit is the same for any asset class or thematic/industry focus. The math involved is no more complex than add, subtract, multiply, and divide. So it is all about the ability to observe and process large amounts of complex information, filter for importance/relevance, and distill into pure essence. Throw in that an ability to understand and predict human incentivization, motivation, and behavior is important, and you have all that you need for a long and successful investing career. Much of that is learnable to some extent but depends heavily in my experience on mentorship and iterations. So prioritizing those throughout is probably the best thing one can do once one has the basic skills nailed down.
Final note: It might be worth spending some time getting to grips with why your writing isn't understandable. In my experience it is impossible to overstate the importance of expressing oneself clearly and concisely - whether verbally or in writing. You could have the greatest analysis and insight on the planet, but if you can't communicate clearly it will for sure be lost on the world. Don't let that happen.
If you’re young: easier than you think especially from top special sits programs (think BX Tac Opps and SS arms at Warburg BainCap KKR etc). Also very doable from opportunistic or distressed credit seats like Apollo or Sixth Street (where you are basically doing L/S). However, your chances are basically 0% if seat is private credit.
Obviously will need to be top talent but that holds true regardless of where you’re coming from…
The only fund that I think still has a 2+2 Buyout rule is Pershing.
What about public credit funds like Abrams Baupost Finepoint?
Pretty sure majority of AUM across all three of those is in equities. Though think the last two have separate credit teams.
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