Ideas Churning Hedge Fund PM
Hi all,
wanna learn about your experience working as an analyst for L/S equity PM.
been working for this PM for several years. On the front, we claim that our strategy is to find multi-bagger stocks. But in practice, the PM just keeps churning my investment ideas, sell-side, and equity sales ideas consistently. He never bothered to read reports and understand the core thesis. Instead, he simply uses a price chart to evaluate the investment thesis on a daily basis.
I once discovered a 7-bagger, but the chart was not good enough in the journey to +700% with -20% from time to time multiple times. In the end, the stock was swung out of the portfolio after we made 100%. Still, I got intense heat from the PM for not getting out 20% earlier.
This is just one example. Sometimes, he got into my stocks 20-30% late, or sell it 50% earlier. I can't do anything about it. Every time he feels we did buy/sell earlier, it's all the analyst's fault. The price chart tells everything.
I was pretty annoyed by the fact that the PM conveniently ignored his mistakes, and then blamed analyst for not doing their job well whenever the share price went against us for several days. This environment creates constant intense stress by the hours.
Ironically, the PM still says we want to find a stock idea with a big upside, we don't care about the near-term noise. WTH.
To conclude, the PM's strategy is to squeeze analysts to his own advantage.
I'm thinking of a move. I don't find this price charting strategy to ever work and beat the market.
what do you guys think?
I know lots of PMs that have been punting with charts and skimmed fundamental analysis. Has worked well for some, hasn’t worked for others. If that’s not your style, jump ship.
I even know long-only PMs who are like that, so you aren't alone.
i don't understand why these PMs who don't want to understand fundamentals keep "yelling" at analysts whenever the prices go against our positions in Bloomberg chat. constantly creating intense stress for analysts.
because they don't actually have a process and have no temperament.
Some thoughts that may help
1/ “PM trying to squeeze analyst to his own advantage” that’s everyone； we work in a shitty industry :(
2/ Need to distinguish what you don’t like. Three separate issues here. (1) is churning ideas fast. (2) is focus on charts. (3) is blaming analysts for everything. I would say only (3) imo is a true toxic issue here. (1) and (2), you can get without the toxicity. So for your next seat you need to think these through. What I realize is u can’t find the perfect PM who is nice and good and pay u. Normally only 2 at best out of the 3. Also know PMs who don’t churn and don’t trade charts can be very frustrating to work with as well.
well. there are more issues I think are a very bad sign.
Firstly, PM doesn't let me see real-time portfolio P&L, weighting. Just weekly updates on stocks we own.
Secondly, PM doesn't tell me when he buys or sells stocks.
Thirdly, i've seen the PM buy on Monday, sell on Wednesday, and buy back again on Friday. 5% move 5% against us, we are out.
telling me can't use macro as an "excuse" to long/short stocks. come on.....
most worrying is that sometimes PM read charts, think it will double, after i explain the fundamentals that proves otherwise, he becomes angry and dismiss my research as garbage. next week stock collapsed, blame me for not talk him out of the trade.
to sum up, left right u get scolded day in day out.
What kind of firm do you work at? If all this true not sure how he’s still in business. At most places risk/CIO would red flag PMs who do the things you said
Is your PM consistently profitable or not
That's the only thing that matters
Everything else is fluff
This is exactly it, the #1 way for a PM to keep their job is to be consistently profitable. Many will adapt their style to make this happen, even if it limits their upside.
OP is working in a world where they think upside is not limited at all and needs to learn ignore their boss sometimes cause end of the if P&L is capped, so is their bonus and if your bonus capped after a while your effort should too.
The one thing I never understand why do analysts gain more stress under a shitty PM? Like if you are fired tomorrow should you not be relieved and you have severance to fall on? If the shitty asshole does well, do they not just pay you out?
Then I know people who work with good PMs but if they are not producing its the old “he is a nice guy but..”
Maybe our industry just attracts people who want pain.
OP, only advice could give as others mentioned the main issue here is your “PM does not respect you” but they “respect your work”, so the two work styles are never going to mesh. For the most part seems you have ignored this and allowed your skillet to grow on your own, I think you should keep finding 7baggers and let the PM do whatever if the eff they want. Ideally now you know the kind of PM i future that match your style.
The 7 bagger was a thing of the past. Still remember it vividly bcos it’s up 7x in 1.5 years. And we are out at 1x bcos the stock corrected 30% in one week.
biggest problem I have is that PM uses price chart to discount ur thesis, however good it is. This is backward looking. To me, it’s more like a technical momentum trading. All fundamental is irrelevant.
Would echo the above... in essence if you're as good of an analyst as you say you are (this is not a dig, merely just reiterating your ability to pick multi-baggers), then any PM would be lucky to have you and you'll ultimately have the luxury of finding the right seat that matches that style. End of the day it's a giant push/pull between labor (you) and capital (your PM), there's always some level of balance that depends largely on the PM/fund itself. If you find the balance to be unfair, it's up to you to optimize for it elsewhere or address it directly with your PM.
To the PM's defense he is operating under an entirely different modus operandi than you so while it's frustrating to see your trades/investments get cut early or recommendations ignored; 1) he is the PM so whether you like it or not end of the day it's his final call and 2) he has to manage the risk, not you.
Yes, he shouldn't contradict his actions by delegating work to focus on 7-baggers if he just plans to ST trade. And perhaps you are right that his strategy may not work or beat the market. I do not know enough details about your seat to be able to more accurately advise but in my opinion you likely should look for another seat if you are unhappy with the style of the current fund. PM's generally are notorious for sweating their analysts ("we took this off too early / too late") because analysts are athletes and they're meant to turn reps. The PM's job is to manage risk effectively while maximizing returns and again without knowing your exact strategy or setup (mkt-neutral? long-biased?) it is difficult to assess.
I completely understand the pressure of managing risk for PM.
what I find it very discomforting is that PM keeps using price chart to explain everything instead of fundamentals then why the share price says otherwise.
As I mentioned in other replies in this thread, sometimes the PM just buy sell and buy again the same stock in a week. Because of the price chart.
In my experience working with this PM, we only outperform massively in flat market when catching 2-3 one two bagger will make us hero. In bull market, we always underperform big time; simply because we cut our position way too early and never catch on.
I increasingly find this kind of strategy is all based on luck. Thoughts ? Advice?
sounds like your PM has potentially high sharpe/low vol which is appealing for some investors/firms
whats your benchmark? is it cash/treasuries or is it SPY or QQQ?
How often and how long did the discussion last when a loss making position was in a difficult time? What is the cut loss limit?
I have some experience, albeit not extensive, and I think this is incredibly common for HF analysts in general, although my experience is it is especially so with L/S equity. Being an analyst, there will always be someone else pulling the trigger, and it seems like all your really great theses, they don’t take full advantage of or realize the gains as well as you could’ve, and all of your ideas that maybe don’t pan out so great, they seem to ride way too hard, and it ends up making you look bad. Being an analyst for a PM is tough for this reason, even if the hypothesis is yours, and it’s good, it will never be fully thought out by your PM the way you have it in your head. I would say having a PM you are open with and can communicate with majorly is a big big help. Everyone wants to be a PM ultimately, so if you’re thinking of a move anyway, you may as well be more transparent with him throughout your theses, because he can’t always have the same ideas and understanding as you. And if he doesn’t like it, you were looking elsewhere anyways, but worth a shot. BOL
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