Feeling lost due to lack of guidance/support as a junior analyst
Couple of weeks ago the 1st year passed since I joined this L/S equity hedge fund, c.a. $100m in assets with global mandate. We're based in Europe. I joined here upon graduation, with some prior experience in private equity/consulting.
Day 1, the PM I work with literally told me to find a stock that will double in value and to get to work. Couple of weeks later I pitch him a US mining company in a restructuring. He has some questions about the cost structure, I work on it, come back to him and he says that we'll pass on that, since this kind of situation (restructuring) is tough to have a competitive advantage in. Couple of weeks later I pitch him a retail stock. The feedback I get is that it's not a super-duper great equity story, but we can take a small stake for one of our aggressive funds. Couple of weeks later I recommended we close the position at a slight lose, as the thesis did not seem to play out as expected.
Around September last year I started pitching some short ideas among tech names and got green light for all of them (4), but I think that it was mostly due to my PM leaning towards being a permabear, so he was just happy to have some short exposure in the lofty priced tech names in the US. We made some money at the beginning, but after the V-shaped rebound in the US commenced at the beginning of the 2019, I did not manage to cover the positions quickly enough and most of the profit evaporated. After that happened, the PM was quite pissed and started to ask, practically daily, when will I find that stock that will double. I pitched some some more names, most of which got rejected, others were liquidated after 2-3 months of not bringing in profit.
Recently, the PM invited me to a conference room, because 'we need to talk'. He told me he hopes I know that my track record has been less than stellar so far and that he is willing to try and 'rehabilitate' me, by giving me a sector to cover, so that when I focus on that sector I can get some expertise and maybe gain some competitive advantage. He told me to 'look for some good stocks in the consumer discretionary sector'.
This was like a month ago. What I was doing last month was basically doing Bloomberg screen, combing through all stocks tagged as consumer discretionary. I got a few names that I intend to pitch to him, when he's back from holidays.
Here's what bothers me. As I mentioned I do not have any prior experience in public markets. I know that being an analyst at a hedge fund requires to be a self-starter and so on. An I believe I am one. But nonetheless I feel pretty lost due to lack of any guidance and learning opportunity at my current shop. What I am afraid of is that after 1 or 2 more years of this kind of trial and error I will be stuck in the same place and will not be able to jump to some other shop due to little progress I made here.
Is the kind of situation I described typical for a junior analyst joining straight from the undergrad? Should I start looking for some other place where I'll get some guidance and mentorship? Or should I just self-educate and try not to get fired in the process.
Thanks.
This place sounds like a disaster, I would get out ASAP. I would run a mile as an investor if I knew that a PM was putting pressure on a junior analyst with no experience to find names that will double. Most legit shops don't hire guys with no prior training, hence the ideal path is you do your 2-year stint in IB and then move into a fund where it is assumed that you can do the basics. If I was in your position I would seek an entry level role in a bank where you can learn the basics and then look to move into a fund that has a clear mentor culture where you spend a few years doing grunt work for the PM's to learn the ropes before you get tasked with generating ideas.
This sounds like a terrible situation ... a sub scale fund with a PM who has either no bandwidth or no ability to train you. Although you didn't explicitly say so, it also sounds like there are no experienced analysts on the team to teach you the job or the fund's process (if there is one). My advice is to immediately start looking for a seat at another fund. However, given that this is not going to happen overnight ... in the meantime .. you need to make the best of a bad situation. Your PM suggested you look at the consumer discretionary sector to become "an expert" and that this will lead to better idea generation. You need to filter it down further than that ... carve out a subsector of consumer discretionary (it's a massive universe) .. find a group of stocks all in the exact same industry (e.g Luxury Goods or Restaurants) and really get to know that industry. Focus on 10-15 names and sorting out the winners and losers. Choose an industry where there has been a ton of volatility recently ... increasing the likelihood that you find something with enough upside or downside to satisfy your PM's thirst for "doubles". You still probably will not come up with any doubles from this group .. but at least you will be putting yourself on the path to doing the job properly while you look for a role at a different fund. All of my new analysts start underneath a senior analyst. The senior analyst typically has a coverage universe of 40-50 names that they can efficiently sweat for a reasonable number of ideas each year. When they are ready to train a junior in our process, we put someone underneath them with 10-15 names to start. I would look for a either a situation like this ... OR ... a PM who has been an analyst, knows how to train an analyst AND has the bandwidth to do it.
This was exactly my experience when I moved over to HF with no background in public markets. I got no guidance or mentorship, and had to figure it out on my own. Not all funds are like this. I stuck with it because I had no choice but to make it work (I was mid-career already at that point and had a family to support).
I literally worked harder than I ever had in banking and taught myself what I thought I needed to learn to be a good investor from re-learning valuation, reading every book I could buy on investing, forensic accounting and other related topics, reading tons and tons of write-ups on VIC to understand how other people looked at ideas and did analysis, following investing blogs, reading investor letters that I could find on the internet, back-solving into other investors' 13F positions, and understanding how my fund's founder invested (for example, you aren't going to get very far pitching shitty turnarounds if your PM likes to invest in high quality compounders), etc.
In the end, every analyst needs to learn to invest on their own. If you are going to stick it out at your current fund, you should really use it an opportunity to figure out what works for you as an investor. I'd rather make a bunch of mistakes and get fired from a no-name fund than to land a job at a dream fund and screw up there when stakes are much higher. You can avoid many of the mistakes there by making them at your current fund.
My 2 cents.