Lean or Large Shop?
Would you rather be in a more structured large shop, or take a bit of a riskier play with a lean shop with significantly less AUM?
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It really depends on the person. One might like getting the deal flow of a larger shop, but doing the 'same' things over and over again as some semblance of "security" where as at the lean shop you're going to be wearing many different hats.
For me, I'd rather go to the lean shop. Learn more, do more things. Pay could potentially be greater with bonuses. Hours are generally better.
Not mutually exclusive - e.g. Pershing Square
good point. will edit my post
i say large because its more likely that you get a second chance there... no one makes money all the time and plenty of guys blow up (some would say its only a matter time).
i think if you are talented and driven, you can always find a way into a risk taking role... small or large.
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Large AUM; lean headcount. Pershing is very extreme example if AUM / person but Glenview would be another very solid option.
This is kind of like saying USC or Alabama is a great place to play football
This question is largely irrelevant. What you should be more focused on is the strategy of the shop and how you think about investing and your PM's track-record. Do you want to be doing equities, distressed, macro, etc.
Then it comes down to the fund's structure / ability to move within. Would argue some places are more 2 and out but not nearly the extent of PE.
Then maybe comes AUM / person but it's so far behind the first 2-3 questions that it's largely irrelevant. And yes, it does feel good to play for Bama. Roll Tide.
apologies, did realize that my question was quite vague and not exactly targeted to have a specific answer. wanted to have an open ended type question that would bring about discussion from all different individual experiences.
to be more specific, the lean shop: AUM is small (around $100 million), but the shop is very lean, 1 PM with 1-2 analysts under, invests in equities. the large shop: $2+ billion AUM, but significantly larger shop with multiple PMs and analysts, invests in distressed situations.
my issue: the lean shop seems as though there would be a lot more autonomy, and potential upside in joining, but in doing so, there's also the risk of the fund blowing up much more easily than the larger shop. im open to both investment strategies as they both are in line with my interests.
interested to hear if anyone has been in a similar situation in terms of selecting a fund, and how it's played out for them
I am working at a small/lean shop. If both funds have same strategy I believe most important are: AUM and PM/management's ability to raise money.
AUM should be >USD 150m to survive some meager months and to feed all mouths in the company (surely depends on strategy and fee structure, also how many shares have been given away to seed money or other investors/management). PM needs to have an impressive track record and he has to be known among investor. Also, relationships to the sell-side is quite important. The guys on the other side earn big bucks with big shops - small accounts are often not worth the hustle. Also, not every good analyst becomes a good PM and not every good PM becomes a good HF manager. You should be aware that joining a small shop means that you startup/business risk is disproportionate compared to a larger and stable fund. Consider the risk/reward and this should be reflected in your contract when joining a startup fund. In your case, they have different strategies and quite frankly being a distressed analyst is very different to equity. So should think also about which strategy fits best. I personally believe that coming from a big distressed shop after 2-3 year is definitely an advantage vs small equity shop nobody has heard off.
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