Long-term potential in L/S HF vs. LO AM
Thanks in advance for any help~~
I just wrapped up my first year of college and landed a pretty solid sophomore summer internship at a highly regarded long-only AM fund in my home city (think SF/LA), which is the city I want to live in long-term. On top of that, I have an offer to intern winter of my sophomore year at a newer L/S hedge fund, also in my city. I'm able to do both, but wondering which path is better to really pursue in the long run. Based on my research, I've found the following pros and cons but wanted to get the community's input:
LO AM:
> More job stability, more firm stability, steadier comp progression, regular hours
L/S HF:
> Better, but more irregular comp (especially at senior levels), more interesting work and more variety, more exit opps
Is this more or less accurate? Is there anything major I'm missing? Does anyone who's worked both sides have advice? Thanks so much.
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Thanks so much for responding. Don't wanna dox myself, but think that tier of firm. Can you elaborate at all on why you think that's the case?
It’s so hard to generalize. If the comparison is truly elite LO AM (like a D&C, Capital, Welly) vs truly elite L/S HF (Lone Pine, Elliott, whatever) then I think your points are right and it’s just a matter of what suits your personality better. But make sure you are comparing truly elite to truly elite! If you take some random HF over something like a D&C then that’s a huge mistake
Yep, Elliott is definitely a L/S fund. Sounds about right. And apparently lone pine is still “elite”
Daily reminder to not trust 90% of the things on this site
Elliot isn’t l/s equity ….
https://en.m.wikipedia.org/wiki/Sarcasm
For whatever reason, many of the LOs will not promote their college hires to post-MBA positions. You will need to go to bschool and then recruit for another LO. I'm sure there are LOs that promote directly -- and I'm sure people can point out which funds do that -- but I think those are the exception than the norm. On the other hand, HFs don't care about bschool. If you are good, you can stay on at your current fund or move to another HF in the industry without an MBA.
Hmm... interesting point. Any idea what the ceiling is in LO funds before bschool is pretty much required (i.e. am I looking at more school 7-8 years down the line or am I gonna have to tap out after 2 years as an analyst to go get an MBA)? Thank you so much for the info!
It's a pretty tight 2-3 yrs at my shop, I would ask other older associates to see what the deal is at yours. Regardless, I would start to think about your alternative options well in advance - B-school prep and lateral recruiting can take longer than expected in my experience and you don't want to be caught off guard.
Most of the programs that I know are just for 2-3 years. In addition, these jobs are entry-level so they don't pay well.
LO’s (especially their analyst programs that recruit from undergrad) are massively overrated in my opinion
Completely agree honestly… not sure why the MS
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I work at a LO (post MBA) and I agree. Better path is to do banking first, build the skill set, more camaraderie, good for the resume
Why do you feel that way? Strong pay (though not as much as HF / PE at the tails), great WLB, interesting work, and tenure is valued
It's just tough being a junior in LO land. You don't get any respect until you're an analyst and they’re just not set up to train and mentor like IB is
Do banking first - ignore my title but I did MBA > Analyst. I said this in another chat but going into a LO AM post undergrad means you won’t get promoted without the MBA, and you won’t shine in MBA recruiting as those with IB/PE background tend to recruit better.
You’ll learn so much more and in a structured way in banking assuming it’s at a legit BB or EB. LO AM just doesn’t provide that solid of a structured training in terms of modeling. I’ve seen this in my H/S MBA where you have guys who came from Cap/Welly/Fido and I was just shocked at how technically inept they were vs. the guys who did MS/GS + PE. They couldn’t even put together a 3 statement model. The IB/PE guys just crushed it in terms of technical skills, modeling, business sense, and presentation skills and generally recruited better. Banking also provides you optionality, you’re a freshman in college and banking just provides more opportunities in case you wanted to do private markets.
^ Chose the post-undergrad programs at one of the shops you mentioned over a top BB group and really regret it now. The mentorship is just nonexistent... but maybe that's how it is in this industry and one is supposed to figure things out on their own, idk. In my defense, the LOs really know how to market these programs lol.
I definitely see that. It's by chance who you end up working with and how much they care to teach or mentor you. Even if you work with someone supportive, they're often too busy to teach you the things that are good for your career like financial modeling. It really is a space where you have to figure things out on your own. In my experience, it would be so helpful if there were a meaningfully deep and comprehensive training program for new hires.
Where are you now? I also picked one of those programs (top 3 LO) over IB and will be starting soon so not exactly what I wanted to hear lol. Any advice on how to get the most out of it?
Any chance can DM you to learn more about your experience going PE -> MBA -> LO? Currently in PE and looking to make a potentially similar transition and wanted to ask a few questions around your approach for making that transition.
Not sure if I can add anything that's rocket science or deep advice. I would just say go to HSW and join the IM Club or Investment Club and get involved and participate on OCR. All the major LOs participate in OCR at HSW.
I did one year of sell-side ER and can echo the point that there's a clear difference analytically for people who came from research/IB vs. the people who went through the associate program at my boutique LO. I already feel I'm losing my chops a little tbh... Definitely have seen great placements for people who did MBA without banking and it can be a good way to differentiate yourself at some of the elite schools given almost everyone who applies is IB/PE
Great comment. I'm starting soon as a post undergrad research associate at one of those LO shops. Any thoughts on what I can do to mitigate those shortcomings?
Having started my career at one of these LO programs nearly a decade ago I can tell you literally my entire class is still on the buy side, did not need grad school, and most are running money at their respective shops.
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