I want to work at a MM HF - Best way to break in?
I'm a year out of college. Target school with high GPA. I work at an allocator and it's interesting work but I want to move to direct investing, specifically, a pod shop type.
I know I'm not on the traditional path. I graduated during Covid and had a buyside role close to lined up that got canceled at the last second due to the economy, so I was grateful to find a decent job, and it's interesting like I said, few hours, but I'm honestly kind of bored.
I want MM specifically because it fits my personality better. Most of the SM's, even the most "prestigious" ones that are hardest to get into, don't generate any alpha and their returns are mostly tech beta. MM's undeniably do generate alpha, and I love the fact that it's a very meritocratic business. In a time when the world seems less meritocratic than ever, that is a huge pull to me.
I am somewhat down on my prospects because I know people at HFs usually come from banking. A few things going for me are that I passed CFA level 1 and got a very high GMAT score (between 770 and 800.) What is a realistic path for me getting to a pod shop type doing fundamental equity long/short?
When you’re recruiting, explain how you generate alpha on a personal basis. You don’t have to run a market-neutral PA but try to show you understand catalysts and your investment strategy. Talk about how you got your sharpe ratio to where it is, possible ways for it to increase it in the future and inherent benefits/risks to your strategy. If you can network abit through college associates that would be a great way to get in. Applying directly also works but it’s much more of a crapshoot.
One thing that you might be a bit off on is the distinction between the MM and SM shops. Although it’s true that many MMs hold a tight leash and expect minimum returns from their analysts, it does not mean that SMs don’t offer that same opportunity to generate alpha. Many SMs work on a prop shop model where analysts are paid bonuses based on their alpha generation. These analysts aren’t just buying TQQQ and calling it a day, because that’s not what the hedge funds investors want in terms of risk and the specific service they provide. They are seeking to generate alpha through research and not just riding big waves on tech. Although people claim the tiger cubs do this, there are a lot more hedge funds with different strategies and services they provide to clients.
One last thing about the MM is considering whether you want job security. Sometimes shit happens to a good investor with a good thesis, however unwarranted, this can leave you without a job quick. In contrast, many SMs pride themselves on having small collaborate teams, which is why seats for those positions are generally rare.
I wish you luck in applying to the MMS you want to work at but don’t count out some great SM firms that exist out there.
How can OP sell his Sharpe ratio and alpha gen strategy if he is a new grad in allocating? He has that much autonomy you think?
Just sell what he does on his personal account. It doesn’t have to be a million dollar position, but all hedge funds I applied to asked if I actively traded and asked about my strategy.
Most respectable MM shops have BD inbetween PM and candidates. Non-traditional backgrounds like yours do not translate well with those folks on paper. This means going to HHs won’t help much.
I recommend either:
1) Transition to IB or ER and then look after 1-2 years.
2) Network directly with PMs or Senior Analyst types at MMs.
3) Network directly with BD folks to convince them to put you in front of teams.
4) Go to MBA and recruit out of MBA.
MBA route is becoming less popular among MMs for added context.
Sorry what does BD stand for?
Best way would ofc be to have your daddy, who is an LP in the HF, make a few calls
Unlike most SM HFs that only recruit through headhunters (who may not take your call / put you in front of clients they think you're 'not a good fit for' because of your allocation job), most MM HFs are big enough to have their own recruiters. Just reach out to them. Seriously. Most will talk to you given your educational background and somewhat relevant professional experience -- its their whole job to source new talent so they'll at least be willing to give you a phone call and take it from there.
Which is harder making the NBA or MM HF ?
IMO clear answer here was mentioned earlier, lateral to ER/IB role and make the move from there after 1-2yrs. ER makes more sense to me (and prob easier to get, seems like a shortage of junior talent right now) and is more relevant to what you’d be doing at a MM HF
Culpa alias eveniet tenetur itaque natus voluptatem. Non a deserunt qui. Nulla autem id culpa eligendi accusantium possimus molestias.
Quae sint sapiente id similique iure aut est. Eos id et ipsum quidem distinctio ut quis. Voluptas ipsam omnis quo voluptas. Cum odit vel ut iure iure esse a. Molestias ipsum autem tempora enim.
Id illo fuga doloremque inventore. Qui dolor nulla temporibus ut qui velit sed. Ut voluptatum qui nam quia doloribus molestias.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...