Interviewing at a top LO HF in NYC very soon. Wondering if I should prepare a separate stock pitch for every interview in the superday or stick with a couple. I have pitched a few companies the fund recently bought so wondering if it is wise to pitch those as well.
Also, if it is a pretty massive fund, is it smart to pitch micro/small caps or go for ideas that are more liquid/actionable?
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Prospect in IB-M&A, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
More suggestions...
Hope that helps.
I don't think it is possible for a LO to be a HF because, as the name implies, they are Long-Only. There is, as far as I know, no hedging.
Anyway, congrats! Definitely understand the markets and have a pitch ready. Think less about the actual pitch in the sense of it is a real opportunity or not, and more on the basis of if it merits further analysis. They will want to see your vision/creativity, as well as what methods you utilize to develop your thesis (KPIs, Macro/Micro, Technical analysis, Trends and etc.).
Ultimately, what they want to find out is: A) Can I work with this person (at least tolerate), and B) Can this person do the job successfully.
Whatever you do: don’t lie about markets cause they will sniff it out. I am not saying Buy-side are detectives, but they live off scrutinizing projections. If they find out you’re full of sh*t, they will immediately discard you because even if you’re the golden god, they won’t be able to trust you.
Just relax, do enough thorough research to feel confident in your knowledge, and let it rip
This is great feedback - thank you so much. For the pitch, I have an interesting idea in a small cap with good moat, margins, high fcf generation, persistent growth, clear runway for expansion, great mgmt, capital allocation etc. Valuation is not cheap, but not expensive either.
Problem is: I’m arguing this is a brilliant company and mispricing occurs bc: (1) Lack of analyst coverage (yes i’m sorry..) and (2) Because it’s in an industry considered to be stagnant/in secular decline (think hotels, funerals, wire transfers, etc.)
I have done a lot of research on this including calls with upper management. I’m wondering if its better to pitch this or go for a large cap with recent downturn bc of a temporary event/something with a better narrative like a spinoff instead - so they can relate more.
if you like it and you believe in it, go for it as long as you can both back it up and it is within their purview (ex.: no sense in pitching TMT if you’re interviewing for commodities).
I covered cybersecurity slightly before it had mainstream (MS, GS, JPM) coverage. It is an absolutely valid argument because it means it could be a significant re-rating opportunity (from not rated to having possibly tremendous focus).
I am sure buy-side will at least like the fact that your pitch is creative - it is easy to pitch a mega cap stock, like hell every TMT portfolio probably has FAAMG. While they are great, they are consensus picks and won’t move the needle vs other PMs or funds (the alpha). Think Druckenmiller/Soros currency play or Burry’s CDS play.
And regardless of the interview, definitely always keep learning (regardless of subject or medium). It will deeply open your horizons. For instance: I am not at all a tech expert, but I know slightly more than the average person. I’ve always been aware and afraid of a lack of security on the web and other digital applications. It is why, once I had finished studying cloud, immediately had the idea to research cybersecurity - the rate of tech development has never been parallel to the rate of its security. cloud was changing structures significantly and so firms were effectively going into new, uncharted territory. Vulnerabilities, given cloud’s significantly superior accessibility vs previous-gen tech, would be plentiful - any good hacker group would have a field-day. We ended up seeing that with Solarwinds. So I managed to be the in the right place, at the right time, because I like computers enough to end up researching on them in my free time through my lifetime
You can still hedge with a long-only by owning counter-cyclical companies, owning small positions in competitors to your portfolio positions, etc. Not to pile on but there’s definitely ways to run a hedged long-only.
Nah, LO can be HF too. Altho it may sound counter-intuitive. BIWS wrote a piece on this literally today, check it out
I don't know what the other person meant but there are certainly LO biased hedge funds and hedge funds who also manage LO products - while they may not hedge in the LO product but I wouldn't let the semantics go nuts here with the point I want to make. I am making this distinction because the approach of your average mutual funds that are LO can be very different from a long biased hedge fund strategy, with the prior being more of "lets buy quality positions at decent valuations at relative overweights of "X"bps to the index vs, the latter being "I am buying this stock as a 5-10% position on "xyz" variant perception with these catalysts". It is not 100p black and white, but above all else I would make sure you fully understand the fund's strategy so that strategy somewhat aligns. Pitching a stock with good moats at average valuation multiples does not equal a thesis for many funds, so that is the only distinction I am trying to make here.
You do not need to have a new thesis for every interview, but I would have multiple theses just in case - you never know where they steer the conversation and anything you say becomes fair game. ex: "In my free time I cover TMT closely" can turn into an immediate "pitch me your favorite TMT idea right now". I think more important than having many ideas, is making sure the quality of the idea you do speak about is very high - better to have 2 really good ideas than 4 sort of fleshed out ideas you are still working on.
I did a comment on another thread about making a pitch about positions the fund already owns so you can check there for my additional thoughts on that. Good luck - most important thing is to know your audience. I wouldn't try to spin an existing idea to overly fit that audience necessarily though, because the thesis creep there just ruins the idea more in my experience, but I also wouldn't pitch a LO compounder with soft catalysts over the next 4 years to a pod shop if that makes sense.
Long Only means Long only, no Short. Long Biased has Short positions.
So I don’t know how a LO Equity can be a hedge fund for instance.
In this case, yeah, semantics matter a lot because it is wildly different to a Long-Short or Long-Bias in the sense of developing plays.
In the L/S or Long-Biased you definitely think of pairings, whether a stock or basket, and you consider correlation.
LO ain’t doing that because they are restricted to only going Long.
I consider LO different to L/S or Long-Bias.
HFs are AMs that hedge. Not every AM is a HF.
Obviously a LO fund is not going to be shorting… but to your point this is the HF forum and the poster self identified “HF super day” so I just wanted to point out there tends to be some stylistic and strategy differences between places like Select Equity that manage long only products now, and your typical Vanguard fund. There are people running strategies structured as a hedge fund as a LO product. We use these descriptions quite broadly, and so my point about avoiding semantics (because it would not add much value) was just to understand the strategy, but we still ended up in semantics land anyways.
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