Long Only to Hedge Fund?
Sort of a weird situation:
- experienced long only analyst with basically 0 distressed/short experience being highly pursued by top tier/high performing true fast money credit oriented hedge fund
- is this the kind of role that even if you can get you should turn down given your analyst peers all have deep shorting/distressed experience so you will always be the "laggard?
- is their mindset something like the fundamentals are there and hoping I fill those gaps quickly?
Thanks for any color
Well shorting is not exactly the popular thing to do right now...
Fair. Rightly or wrongly assume this strategy is almost 100% resilient to the equity Reddit/robinhood crowd. Likely also to associated congressional legislation, however, never any guarantees
The grass is always greener.
I wouldn't worry about your peer analysts, more about if you can do the job well. If you can and want to roll the dice, why not go for it? You don't have to accept the offer if you get it.
That being said, in this market a cushy LO seat sounds really good.
Thank you
A handful of successful HF people I know have come from LOs. Primarily Fido but elsewhere too.
over time, I’ve also seen people go the other way - they prefer the stability and growth potential of a LO to HF seats that were mid-level: comp didn’t justify the risk.
Thanks. Mine is a scenario where the stability/comp/growth on the long only side is murky and the upside is clearly there on HF side, but as you rightfully point out so is the risk.
Alex Sacerdote, Gavin Baker, Jeff Ubben come to my mind. Anyone I am missing?
I wanted to follow-up and see if you took a position at a HF and how recruiting and the transition have gone.
I ended up not doing so. There were a multitude of reasons but essentially I saw a higher expected value from the long only seat. Something like 8 years at X being better than 3 years at 2-2.5 x (this a simplified version of the calc I did) before considering lifestyle, COL etc. So, the switch didn't make sense given point in life. Might have been a different story at 25.
I think you made the right decision under the right framework. It makes sense trying to take a shot at HF early on, when your oppty cost and xp is low, but given that its so hit or miss.. at mid to senior levels LO earnings is much more durable and the earnings stream has a higher multiple.
This math is a great way to frame that decision!
Total payout = duration * per year comp intensity
Sounds like this was Diameter if you are on the fixed income side.
Really interesting firm / strategy but the firms model does seem to churn people in / out, including ones brought in from very strong funds.
Quite a few people brought on from long-only funds / banks though so wouldn't be too worried on that side for future people who look at this, though turnover is definitely an issue.
Why is turnover high though? Is it the comp or culture or someone else?
My understanding is that their staffing / coverage model is quite a bit different than other credit hedge funds. Less pure intellectual with more of a focus on trading which some of their hires excelled in, but others did not.
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