Idea Generation as MM Analyst
I'm considering a transition over to MM HF after two years of ER. Although it will likely depend on the specific team, but to what extent is an analyst typically expected to immediately generate ideas for the book compared to primarily assist the PM in his/her ideas?
I'm not certain I feel particularly ready to guarantee money making ideas at a consistent rate just yet. Maybe I'm not quite ready if I'm expected to significantly contribute from day one.
Based on the most helpful WSO content, the expectation for idea generation can vary significantly depending on the specific hedge fund and the team you join. Here are some insights from the WSO threads that might help you understand the role of an analyst in idea generation:
Supporting PM's Ideas: As an analyst, especially new to the hedge fund, you might find yourself primarily researching and developing the ideas given to you by your PM or colleagues. One user mentioned that their ratio was about 85/15, meaning they worked on the PM's or colleagues' ideas 85% of the time and on their own ideas 15% of the time.
Developing Your Own Ideas: Over time, as you gain more experience and confidence, you will be expected to contribute your own ideas. Another user highlighted the importance of being able to pitch your own ideas to the PM as a way to gain respect and get noticed.
Learning Curve: Transitioning from equity research to a hedge fund might come with a learning curve where you're not expected to generate winning ideas from day one. It's understood that you will need some time to adapt to the new environment and expectations.
Quality Over Quantity: The focus is often on the quality of ideas rather than the quantity. Analysts are expected to cover their sector thoroughly and present well-researched ideas with a strong thesis and potential catalysts.
Team Dynamics: The culture and dynamics of the team you join will play a significant role in how much you're expected to contribute immediately. Some teams might provide more support and guidance as you transition into your new role.
If you're concerned about your readiness to generate consistent money-making ideas, it might be beneficial to discuss this with potential teams during the interview process to understand their expectations and how they support new analysts. Remember, it's common to have a period of adjustment where you're learning and growing into the role.
Sources: How many ideas do you generate per week/month?, https://www.wallstreetoasis.com/forum/asset-management/qa-equity-research-analyst-at-top-3-am?customgpt=1, Q&A - Tiger Cub Analyst, First time PM - Now What?, Long term, concentrated, deep fundamental investing
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