Interested in moving to HF from Equity Analyst role at large AM firm. Some tips would help ?
Hi guys. I’m a fundamental equity analyst at a large asset management firm in London at a long-only team with a quality/growth investment style focus. Just wanted to check how good my profile is for some of the big HF and which one is best for my profile ? I’m looking to make this move in the next few years (ideally with 5 years experience). I hear good things about Citadel and P72…
I’ve got just over 3 years experience and a generalist across all sectors/regions but I tend to do a lot of industrial companies though.
Why do you want to wait? Your style of investing and analysing stocks is worlds apart from how citadel/P72 operates. It would be better to move earlier, if you want to work at multimanagers you should read up on their style of investing and have pitches prepared with clear catalysts. Have an understanding of how they play the earnings cycle too.
The reason why I want to wait is to build an even deeper understanding the companies I’ve worked on and pick up on some other companies, especially in the industrials space and cover as many different business models as possible. These HF’s are competitive and the analysts will know the drivers of each business in their respective sectors and understand how the cycles move…that takes time to learn with reps. My logic is that this will give me the best chance to survive in that world. Correct me if I’m wrong on that logic …
The issue is that a significant amount of what you're doing right now won't translate into a successful ramp/coverage under the MM model. You're given some time to ramp up and get to the level of those other analysts. Working under a different model won't help.
And just to respond on your comment in styles. I was under the impression that MM have different pods with different styles and ways of doing it. So I was under the impression that I would find a long only quality growth PM with maybe a 3-5 year horizon. Or a PM that splits their book on L/S basis
All PMs have different strategies, but they're still married to the same central risk limits. This means they can't capture LT alpha directly and must be positioned for the stock's quarterly movement to capture the NT beats/misses. If you VaR limits are breached because you weren't positioned for the market's reaction to the NT 30 bps margin contraction on a name, no one is going to care what your 3-5-year view is. That's not how you monetise stocks at MMs.
Funds that operate in the way you're thinking are shops like Ako Capital and Egerton (assuming you're a brit)
Very useful information. This makes perfect sense. I’ve heard of those firms but don’t know much about them. Yes I work in london. I’ll look into those.
and in response to your other comment. Quite surprised you say it doesn’t translate into success as an analyst at a MM. because to make a play on near term earnings cycles still means you need to know the drivers of the companies, which a lot of these analyst would have spent time doing at the sell side for instance and years of coverage by really getting to grips with the respective companies/business models. But I guess you’re right. Thanks for the tips.
The drivers that matter for a stock can be different to those that matter for the company. This is especially true in short-term, tactical plays that pods will look to monetise.
If you ever see a pod process and what goes into their idea generation, I think you'll see that it can look quite different to the deeply fundamental work done at LOs. Is there an element of convergence? Absolutely, and so the best pod analysts will be playing the earnings game into the long-term, bigger picture of the company's narrative. That being said, at the point of monetisation, the skillset can be quite different.
It *can* be quite different. As I said, a lot of convergence in themes going on at the moment.
The reason why I want to wait is to build an even deeper understanding the companies I’ve worked on and pick up on some other companies, especially in the industrials space and cover as many different business models as possible. These HF’s are competitive and the analysts will know the drivers of each business in their respective sectors and understand how the cycles move…that takes time to learn with reps. My logic is that this will give me the best chance to survive in that world. Correct me if I’m wrong on that logic …
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