Too cold in NYC to garden right now..
~8 years on the buyside across two firms: half a generalist at an event driven fund, more recently sector-focused fundamental long / short. Both are single managers.
AMA
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How early in your career did you feel certain that you had the chops to do well in the industry and what did that subjectively feel like?
Was it an objective appraisal such as, "Okay, I clearly am more interested in this or putting in more effort than my banking peers" that you took as a signal? Or was this something you only felt more recently in your career.
I ask as I am looking to pursue a hedge fund career post a number of years of banking, but wonder, as I suspect many young people do, whether I have the potential or 'what I should have felt / be feeling' if I do.
10+ years post college and the imposters syndrome still pops up now and then. Unless your last name starts with Druck, you’re always going to run into someone smarter than you/ better than you.
I can’t think of a “moment” or feeling but you probably have a sense if you have the raw intelligence to figure out / understand the concepts. To be clear though, after you get to the buyside, you’ll feel like you did your first day of IB where you have no idea what you are doing and it’s impossible to think you’ll ever figure it out.
Realistically the only way to know if you’re good at picking stocks is to do it, and your PA doesn’t count.
As an aside, and I know people say this, but if you want duration in this industry you HAVE to have a passion for stocks (and I mean specifically stocks). There are parts of the job that objectively suck and you will burn out if you don’t enjoy the work
Thank you.
do you need a trading assistant
I do not
Had to ask.
Biggest year comp wise?
Should have added it to the top bit just giving general comp ranges:
Base:150-200
Bonus:1-7x base
2 unrelated questions its fine if you answer whichever you feel is most relevant for everyone or both :)
Thank you for this and good luck with the new role.
I don’t have any secret sauce on building those relationships. Work hard, ask questions, own up to mistakes and learn from them. If you build trust with your boss, they will be much more willing to help / mentor you.
On the other one, you can get massive short term moves just based on how people are positioned and slightly better than / worse than feared results. Consensus trades can work, but you better be right on the magnitude otherwise you’ll get smoked.
As an aside, you should assume almost every fund that says they “invest with duration” / “don’t care about quarters” is lying to you. So knowing how a stock will move on various pieces of information is going to be important if you want to generate p&l.
Assuming you are staying in the industry, how are you approaching recruiting? How do you describe your process to prospective funds?
True generalist seats are mostly non existent at this stage outside of product specific type roles like arb or capital markets. What you’ll see is broader coverage areas (eg consumer va only retail) and maybe not “full” coverage where you have an updated model on every name etc.
If I could do it over I’d probably start in a specialist seat. Think there’s tons of value in building that repeatable process vs every opportunity starting from zero. Additionally, you learn what moves stocks (and this is different even within my different subsectors). Some stocks are data trades controlled by the pods, others it’s all about the algo etc. Ultimately the job is picking stocks that drive p&l. The goal is to figure out the rules of those stocks, not try and dictate how it should be.
Honestly, the event space is pretty tough. All the softer catalyst stuff (eg spins) was pretty tough when I was doing it but maybe that’s changed. Merger arb was really the only place you can consistently make money but it’s a slog and def not for everyone (wasn’t my vibe)
I’m wondering if you think this background is possible to break into hfs. 2 yoe ER-> IR
Would pms consider someone from IR if they’ve had ER experience. If L/S is a hard pivot, would long onlys or BBH be a good start.
Why do you want to leave IR?
following, interested as well OP
Thanks for doing this, how do you suggest thinking about the tradeoff between:
PM vs Sector
Niche sector vs Broad sector
I’m in one of the big pod training programs and started out of undergrad. I’ve built a few relationships with PMs that will be hiring from it. One covers tech and would want me to look after the semis and upstream semi vertical given my college background. They work for a top Sr PM but have only spent 2 years under the pod model. Run a concentrated book, seems to be a good mentor.
Other PM is more generalist but is a big name in the industry and will be building out a big team/franchise. Not sure how to view the opportunity to become a genuine sub sector specialist given my science background which I can shop around at other firms if we blow up vs working for a more generalist tenured guy.
I am not (nor have I ever been ) at a pod so take this with grain of salt. Assume the generalist pm would still have you focusing on a specific vertical? In general, I’d prob be skeptical of a generalist pod setup unless this person has a proven record of generating p&l across industries. Sounds like they have given you are calling them well known but I’d def want to know.
Recently joined an event driven fund doing mostly arb after coverage IB. What drove you to move away from event-driven to fundamental L/S? Also curious on how you view the event space now that you’ve gotten more reps as a fundamental guy.
It all really comes down to what you like doing. Event driven ultimately wasn’t my cup of tea but some of it was likely a function of the market backdrop. A lot of the good spin out trades were mostly in the rear view so that whole universe during my formative years was shtcos and corporate boredom trades. On the arb side, some guys are wired for it but it never really clicked / excited me. That said, it’s def a repeatable / low vol strategy so I get the value add for the right LP base. It def taught me a TON about risk management (given the asymmetric downside in every spread you are long) which is probably the biggest thing from arb that I still use today
On the flip, I’d probably be a better event investor today as my fundamental analysis skills are just so much sharper. That said, haven’t spent any time looking at those type of situations as we aren’t paid to take event risk
Appreciate the color on your experience on the buyside. Have developed an interest in the event-driven space and read Greenblatt's notes/book, but was wondering if you recommend any books/podcasts that have helped you become a better investor? And, what do you look for in people interviewing for your fund?
Thanks for doing this. Regarding the data disadvantage smaller funds may have, any good way to still play in the markets (eg Consumer names trading on data flow, Amazon down today bc of yipit…)?
How did you make that switch, and end up deciding what sector you wanted to focus on?
Also if you went back to college, is there anything you would have done differently?
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