Is the grass really greener? (LSD millions SM Senior Analyst hopping to C/M/BALY/P72)
I am at a top SM where I have made LSD millions a year for last three years, in a very low net risk framework. Pay is good on absolute basis but sharing ratio is very low. We run higher vol and P&L in my coverage has been >$75-125m a year, Back-calculating sharpe from volatility and book size, 1.5 to >2.0 by year but looser factor constraints. Not from betting on AI. I am only analyst in my coverage. My PM rarely if ever goes to my conferences, most of my coverage would not recognize him. I am 32.
Job is a grind, QoL is good, I do not wake up in existential panic about getting fired but there are lots of things I don't like. I want more autonomy, I want to win more, I want a more direct slope. The PM covers a lot and we are slower than we used to be.
Job security is pretty good at my shop even for analysts who are underperforming. Analysts at my shop do not have their own carves and are prohibited from owning own track, so I have to jump to a Senior Analyst seat at multi-strat if leaving. I would want to stay at least three years at place I am jumping to.
I am at glass ceiling currently at my shop, it is one-PM model, so I am looking at jumping and getting higher sharing ratio.
I think my process is differentiated and there is alpha in my coverage. Let's assume I found a PM I liked, respected, with track record of managing risk and not blowing up...
Is the expected value actually higher in a pod seat? I understand the GMV*volatility*slope*sharpe math, but am thinking about job-security trade off. I want to make this jump. I would like someone on the other side to tell me if I am being irrational.
What kinds of deals do people get leaving this seat? How common is my set-up? How many senior analysts have you seen in seats like mine take the jump and fail? How about succeed?
Interesting how despite being in the industry and probably having a great buyside network, you’re resorting to WSO to answer these questions vs asking peers…shouldn’t be a problem if you’re at a “top SM”
Clearly you’re a sharp and successful guy who understands the payout. Anecdotally have heard of some great guarantee packages for folks with your background
can’t speak for OP but anonymous advice is as good a data point as any
Based on the most helpful WSO content, your situation is not uncommon, and the decision to jump from a top SM (single manager) to a pod at a multi-strat (e.g., Citadel, Millennium, Balyasny, P72) is a nuanced one. Here's a breakdown of the key considerations and insights:
1. Expected Value in a Pod Seat
2. Job Security Tradeoff
3. Deals and Outcomes for Senior Analysts
4. How Common is Your Setup?
5. Key Considerations Before Jumping
6. Final Thoughts
In summary, the grass can be greener, but only if you carefully evaluate the pod's setup and ensure it aligns with your goals and risk appetite. Many have made this jump successfully, but it requires a calculated approach to avoid the pitfalls.
Sources: HF Analyst: The Things I Know For Sure, Life decisions...buy-side equity analyst, Point 72 vs Blackstone, Q&A: The Future/Current State of S&T - BB VP Macro Trader, Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role
I'm not sure you understand the math. At most MMs, it's going to be extremely hard to make the $100mm+ P&L you're currently making. Few MM teams make that much, let alone single analysts covering a subsector. You'd need to land in a very large AUM pod, and the factor/net/concentration constraints are still likely to be tighter than you currently have.
In all likelihood, you'd be moving to a worse seat.
The grass isn’t greener.
If you join a multi-manager hedge fund as a Senior Analyst, you probably won’t get contractual economics. If you do, expect max 5–10% (depends on how the firm defines Senior Analyst, Sub-PM, PM, and Senior PM, since titles vary).
At many pod shops, even tier-1 , $100M in P&L is a good-to-great year for an entire pod of five or more people. You’re unlikely to generate $100M+ on your own from a sleeve: unlike at a single-manager fund, your factor and beta exposures will be neutralized, and your PM won’t give you a sleeve large enough to make that kind of money.
There are also plenty of ways for an analyst to lose their job without the team blowing up. Teams often cut headcount during drawdowns. Your PM can let you go for any reason, including vibes. They might get poached and leave you without a team, retire, or be profitable but miss targets and get shown the door.
Yeah something's not adding up. Discretionary stock picking strategy under factor neutral constraints does not typically lend itself to 1.5-2.0 Sharpe over any appreciable period of time. Either your math is wrong or your book tilts quite heavily >25% on factor bets, even if you are net money neutral. As mentioned above, the fact that you don't understand how gargantuan of a difference book management at a platform would be compared to what you have today, does not bode well for the grass being greener in another seat. Stay put bruh
Steak too juicy, lobster too buttery
Almost can’t believe you’re asking this question seriously. In terms of comp, the odds are clearly stacked against you on a risk-adjusted basis moving to a MM compared to your current seat. It’s not even close. Plus worse QoL, the work required to rebuild trust with a new team and learn new systems, becoming a smaller fish in a bigger pond, etc. You’d be giving up an 80-100% chance at continued great success vs a 10-30% chance of extraordinary success. Unless you’re very unhappy for some reason, this would be a poor choice.
OP gonna let boredom/fomo get in the way of having a successful career/life
I don’t get it either. But that’s the hedonistic treadmill for you.
And this person probably overestimates his skill vs his seat
Man or woman living the dream does not realize it
What i am hearing is you have two options at 32 years old:
Honestly for most people 1. is the obvious choice. I'd say 2. only makes sense is (1)you already saved a bunch of money and don't care about job stability (make sure your wife is onboard with this) and (2) you already have a sense / roadmap of what you might need to do to achieve this.
Other people's success /fail stories are not useful imo. aggregated career data is markovian and individual's success is uniquely path dependent (family safety net, geography, your hidden soft skills, you get the point). You'll hear mostly successful stories anyways bc of both selection and survivorship bias
if true, already getting compensated very well, take the job security. knowing myself those other pod shops, few bad performing quarters, the whole team is let go. very rarely people get to stay more than a couple years, if lucky. it's absolutely more grueling and stressful too.
You don't leave that seat for MM senior analyst you leave to take a swing at PM. It is probably easier to land a PM seat at the MM than find a pod that has the kind of senior analyst seat which would make sense for you.
If you present your past performance as a track like you've done above you can get a MSD guarantee and extra slope to cover the risk of the move. Then it is boom or bust after guarantee is up.
If you aren't ready, stay where you are.
This is the correct answer. Risk/reward only starts to look reasonable if you can land a PM seat where the large guarantees and uncapped upside offset the risk of 0s.
depends on a few things
If you’re the money maker you think you are, the PM should be incentivized to cut you better economics.
In my experience, people over estimate their own/under estimate their PM/firms’ contributions in wins and the inverse when they lose.
Seen a lot of people who want to take more risk because they think they have the special sauce and when they make that jump, their special sauce bottle just ends up making farting sounds when they try to squeeze some of that magic goodness on their hot dog. They end up run over by a viciously brutal market.
Maybe that’s true, maybe it’s not. But you’re contribution is undeniable, than your economically driven PM should try to pay you more to stay.
Also a LSD payday on a $75-125m annual p&l isn’t bad. In my day, we had a blended incentive fee rate of 15% and the promise was you get paid half the incentive fee on your contribution. On that math, the SM formula would pay you $100x15%x50%=$7.5m. Factor in hedging costs, needing to carry dead weight from another sector heads dog shit year, $2.5-5.0m is a decent payout.
That also assumes you’re being honest about LSD, which I read as ~$3m a year. If you’ve been there long enough and are viewed as a leader in the firm, you should try to play for some GP mgmt fee to juice that up a bit.
As others have said, you won’t generate anywhere close to $100m of p&l in a MM based on your role and the risk model.
As someone who was a in a similar position and made the leap for similar reasons (frustration with existing seat & the attractive calculation of "what would I have made at C/M/B/P72 given xx% performance on my coverage over the last 5 years?") - be very cautious / careful before making this decision.
Be honest with yourself about what your typical time horizon & idea turnover is and whether that's a good fit for the usual MM pod model. If you're used to a world where you ramped up and gradually stuck more names into the book over the first year in a seat - would you be comfortable putting on 30 positions after a couple of months of arriving? What have drawdowns been like in your vertical? Does your process work in a world where a 3% drawdown in the first 6 months = fired? Is your instinct when a stock moves 10% against you but you think the thesis is intact to double down or cut risk first and then revisit? How reliant is your process on meeting mgmt - and would it survive a world where your access is shared with 30x other ppl at the same fund covering the stock?
As well as the right tail outcomes remember to consider left tail outcomes & weight appropriately when thinking about EV of the next seat. I have seen several very successful investors struggle to make their process work in a MM context and get fired in the first year. I've also seen people join a new team as a snr analyst with carve / jnr PM to try and get a proper track record for the first time, and then have the SPM blow up (and whole team get canned) before they ever get the book that was promised.
A good guarantee protects you a bit from these left tail outcomes but then you're still looking at a long (probably 12m if you're senior enough to be getting a good guarantee) non-compete and then trying to find a new seat. Which is harder than jumping from an existing seat (initially because you still have ages left on n-c; later on because you're not as in the loop & don't have as many good up to date ideas). And then you're likely starting from scratch again ramping at a new fund with no guarantee & just salary until you make some money.
How did you do in the recent carnage ?
bump
I do not understand responses here. Isn’t everyone in this business for the right tail? That doesn’t exist at most SMs any more?
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