HFs are less snobbish than PEs
Coming from a non-target, non-BB/EB background, I find this to be generally/directionally true. Got interviews at some ~5bn L/S fund and very big LO names. However, almost no big PE shops would take a look at my resume or give me a 1st round interview. Fwiw, I can nail a 3 statement _ LBO model.
Have been thinking about why and the conclusion is: prestige really matters for PEs, whether it's your school or company's brand name because coming from those, PEs assume you are significantly better prepared, which may or may not be true. For HFs, it's more about raw intellectual, your interest/passion, and how you think about stuff.
I saved this priceless quote just for this occasion:
Where these preppy PE boys gonna go now? Tiger is sUCH a G00d fUnD
Does this imply for the Activist ones too
Trust him, you preppy mofos, trust the raw intelligence of the Prospect in IB.
Best PM I know did his UG at a Big Ten school, hustled his way into SS ER, got to the buyside, and now makes 8 figures running a market neutral pod. I've never worked in PE but HF analyst/PM is the most meritocratic job on Wall Street IMO.
.
holocene?
Assuming the founder/manager is not a jerk?
MLP?
*with the Exception of D.E Shaw and some of the big equity single managers
*all of the big activist funds that exclusively hire 2+2 from apollo
I know Pershing does that but w Blackstone. Which hires from apollo?
Just ask them, they'll make sure you know it.
...
HF guys love to pump up their "raw intellectual horsepower" and lack of social skills but are really just butthurt that they don't have long-term locked-up capital and have to mark their assets to market rather than their own models. Note that every successful HF tries to bring PE-like features into their master fund (side pockets, privates etc) but no PE fund starts offering investors the ability to redeem at NAV.
This is EXACTLY why hedge funds are seen as more challenging and intellectually stimulating than private equity. You have less resources & information in the public domain to essentially evaluate the same sort of investments across equally strict return hurdles while marking your ideas to market on a daily basis. Of course both of us are subjectively pumping our own tires but there's a reason you've seen PE/VC funds try to trade public equities and fail substantially, while the likes of Tiger/D1 have had their public books crumble but their privates mysteriously stay afloat.
No one is "butt-hurt" their capital isn't under LT lock-up - I think it's fairly common knowledge after the past 6 months watching Klarna take an 85% mark-down that most private portfolios are on the brink of substantial losses and most allocators will be re-visiting their approach to guaranteeing capital preservation to a place like Tiger which can lose ~60% of their $ but can't redeem for 3 years.
Dude why play on hard mode? It's about making some cash and getting out, not proving whose dick is bigger.
What's the point of swimming in a red ocean exactly? I'd rather do financial engineering tricks in PE/growth than trying to make a management team confess how they might feel about next quarter's EBITDA margin.
If I was at a hedge fund I’d be butthurt that we hadn’t outperformed grandma plopping her money down in S&P index funds. Or that the geniuses at Tiger Global lost more in this recent bear market than the NASDAQ, even though their risk is supposed to be ‘hedged.’ What a circus of tarot card readers. The only profits managers consistently make is through insider trading cough cough Steve Cohen or dumb luck.
PE/VC has benefitted massively by sailing with hurricane winds behind them. This cycle is going to show some nasty realities about the business model and a lot of allocators misunderstood the risks that they were taking with illiquid securities marked at a premium to liquid ones now.
It's not like PE is levering the highest quality of companies. So you have that combined with increasing debt costs and allocators who may not be able to meet their commitments because of issues elsewhere in their portfolio.
"Allocators not meeting their commitments" is one of those risks that looks scary from the outside, but if you read a standard LPA / PPM you will see that the dilution provisions for defaulting LPs are so punitive for that LP (and beneficial for the GP / other LPs including coinvest) that you soon stop worrying about it.
Having spoken to a few allocators, I've heard they're waiting for the marks across the PE/VC portfolio to drawdown so they can allocate more into illiquids (and not break liquidity limits)
"Lack of social skills"
Lmao in PE you get cussed out by your MD for even speaking to the management team while in HF you're expected to build relationships with management teams as a junior
Lol this is so wrong
Clearly doesn't know what he is talking about.
If you compare the depth of management access and how freely they can speak in a public versus a private context I don't see how you can sustain the theory that HF investing gives you more opportunity to develop social skills.
PE marks to market as well but not as frequent so don't think your point on that is valid
Does PE have a better long-term r/r? Perhaps. But they live extremely boring lives and are generally wet towel human beings
Haha, I agree, but this take is not popular here, as this sub is flooded with market neutral MM folks. Intellectual bragging rights mean nothing if you're delivering the same returns. Maybe with less daily PnL vol, but not materially different on a longer time horizon.
That are a decent amount people that work as HF PMs, making a lot of money, that went to state schools, or as some on here would say, "non targets"... or otherwise are from "non traditional" backgrounds.
They fly under the radar. They are really sharp. Really likable. Very down to earth. Work hard. They aren't assholes. There are more of these folks in the HF industry than PE in my experience (as a % of total workforce, not absolute numbers).
Love these types of people, tbh I aspire to be like these types of people.
[repeat post]
Pe is banking 2.0, culturally speaking.
The people running private equity today were innovators and original thinkers in their time. The lbo? A new concept and market to the milken lineage; they weren’t good at doing what they were told but had to price risk no one had priced before. Pe personalities today don’t seem to match the legendary origin of this industry
True in every field. The type of software engineer that now recruits into Google/Facebook/Microsoft are not the same as the dropouts that started the companies in their garage.
Tigers are less snobbish than lions
Says the Teller in Non-profit
Sir your mortgage request has been declined due to inadequate DSCR. Our records show you have excessive liabilities from margin calls. We have also suspended your credit card indefinitely. For assistance please call 1-800-382-5968.
When the prospect clearly misconstrues a joke for reality
good luck in 'AM' bro
PE is very fake, yes. So are their marks.
You're right but the comp aint fake.. best way to make a lot of money on a risk-adjusted basis IMO if you're willing to put the time in / be a cog in the machine (not for me, but I get it)
Fake or lagged?
I think LPs are pretty aware of the risk in assets not marked to market but they like them anyways because they smooth out portfolio vol so their sharpe looks good
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