Leave LO position to work for HF?
Without giving too much away, I've been at a large well known LO fund for about six months post-MBA. I am thinking about leaving to go work for a small hedge fund and want some advice. The hedge fund has <$1B AUM but I believe in the strategy and the founder, and they have permanent capital. I feel like this opp will give me better training but I don't think it will look as good on a resume and I am worried about leaving a job six months in. Any thoughts?
Why are you dissatisfied with your current job? The top LO analyst seat is much harder to land than the sub scale HF seat
I few reasons but it really comes down to that I think HF work is much more interesting and I don't like the firm culture. I don't really see why which job is harder to land is relevant.
Yeah apologies for the overly reductive response. the reason it's relevant is that if you give that seat up (especially after 6 months), you may find it difficult to get back to a similar seat if you end up regretting your decision. Have you been speaking with other HFs? if you are confident that LO is not right for you, it could be beneficial to make sure you're considering the full universe of HFs, rather than going with the first one you come across (you said you liked this one in particular, but maybe you will find one you like more). Anyway, i think other contributions in this thread are more helpful than mine can be.
Don't know why the MS - extremely valid point on LO analyst seat
OP here, I didn't give the MS. I think it's a valid point but I just don't see why that is a reason to stay in a certain position. Go where there is the best fit and you have the most opportunity to learn, no?
Leave so you can open up a seat for me
Think it boils down to a longer term function of what style you prefer. Comp upside can be pretty strong in either seat with A) more volatility but upside reward in the HF seat and B) tons of upside at the LO but likely more competitive to get there just based on higher headcount, less upside in % PnL, etc.
I think 6 months post-MBA in an investing seat, making a near-sighted comp based decision would be silly. Top LO can be a very rewarding seat if you make it to PM eventually and there's likely a clearer line of sight to achieve that versus say moving to a SM where you (likely) won't ever be the PM. This said, if you preferred the idea of being in long/short or short selling at all then I'd say it's best to make the jump. I think "what looks good on a resume" is a bogus excuse because brand name matters inherently less as the job is largely the same at the surface level (model, read, generate PnL $).
Name brand simply doesn't matter (I work for a smaller fund most people haven't heard of and we have outperformed dramatically). Given you're so fresh out of school I'd suggest picking a seat based on 1) who you'll be learning from and where that ceiling is highest, and 2) what you think you'd prefer from a style perspective (LO focus on quality LT companies, duration vs. L/S more tactical, hedged, deliberate, and often fast).
Thanks, this is helpful. This is not comp based at all, although I don't know the comp yet I am assuming I will have to take a lower base salary to go work for the HF. This is about fit and interest for me. My gut feeling is that the HF role is better for me, but my main concern is that the six month stint will screw me down the road.
Oh then I wouldn't worry about that. Pivoting from LO to HF after 6 months will only penalize you should you want to return to LO (the "why'd you leave then?" questions). If you make a leap and down the road want to move fund to fund within HF, the story is pretty clear that your interests were more in L/S and you had a great opportunity to make that jump and took it.
Absolutely don’t do it. Stay in LO. Do u have a sector coverage? Do a few years then if u want to make big money fast join a pod or sth. Joining a sub scale SM is not a smart decision
It's not really about money it's about quality of life and enjoying what I'm doing, because of that I would never work for a pod. Working anywhere in this industry long enough you will make plenty of money to be comfortable. Why are you so against the move?
Because your assumption is wrong. Working at a sub scale SM is extremely dangerous. U need to reevaluate what u believe about the HF industry
This is a good reason:
This is a good reason:
Not obvious to me that this is a good reason. What do you find more interesting about HF work?
I'm not saying all HF work is more interesting but in LO you basically have a sector you cover and just recommend stocks in that sector. I find hedge fund work to be more more intellectually stimulating with a broader mandate generally. I'm talking about SM funds not pod shops.
This is not a function of LO vs HF. It's a function of generalist vs sector specialist. You can have LO generalists and LO specialists. HF generalists and HF specialists.
You could move to a HF (even a SM) and still be just as pigeonholed into one sector as if you were at your current job, or at a pod shop.
That's probably why you're getting the pushback - when you frame it as LO vs sub-scale HF most people will rightly tell you that the LO seat is more valuable (risk adjusted). But as you clarified here, for you it's about being a generalist vs a specialist.
I highly suggest waiting a full year, perhaps even two, before making the jump from your LO to a HF. Six months post-MBA is just not long enough to have gained any real experience. How many situations do you think a LO analyst sees from cradle to grave over the course of half a year? Zero. Experience is only partly gained by diligencing ideas to the point of getting something into the book. I’m assuming, if you’re LO, you are likely investing with a 2-4+ year view. You just simply haven’t been there to see a thesis proven out or challenged. You haven’t been 9 months into a trade and then the rug is pulled from under you on a big Q miss that seriously stresses your thesis and has the PM bothering you on what to do. I’m not trying to speak down to you, but these are simply things you cannot learn without letting time pass. How can you say you’d prefer the HF style when you haven’t truly lived a LO investment cycle? This also applies to your industry knowledge. Whether generalist or sector specialist, you haven’t been around long enough to become immersed in business models and see trends really change.
Frankly, I’m not sure the HF spot you’ve been offered or are considering is that unique. As mentioned, I’m not confident you’ve been around the block long enough to even know your own style, and while permanent capital sounds nice, if you’re at one of the large LOs I mean you may as well think of that as permanent capital…your firm will not shut down after a bad year or two (or three!). A LO analyst looking to make a HF jump is not a unique background; you will always be able to find a HF seat if you desire.
Very winded way of saying I’m skeptical you’re aware of what you don’t know. Careers are long, nothing is being sacrificed by hanging around the hoop in your current seat for a bit. I agree with some others that moving to the HF now will do more harm than good.
I would listen to this person
Out of curiosity, is it easier to transition and find roles from a top LO to a top SM versus the other way around? How about MMs? Would appreciate your advice as someone looking into the industry!
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