Slow day and awful weather. Going to do an AMA for 1-2 hours for any students that want to learn about the industry since I see a lot of non-sense here.
I have 6-10 yrs of SM L/S experience. Started doing L/S out of UG and have been doing it since. Now work at a large SM that is often posted about here.
| +23 | % of pods making 9 figures consistently? | 28 | 7h |
| +9 | Fastest Way to MMHF? | 3 | 4h |
| +6 | Credit HF Guys: How much do you think abt "value" | 7 | 1d |
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| +4 | Amakor Capital - Who are these guys? | 2 | 3d |
| +3 | culture at citadel macro | 1 | 6d |
| +3 | 4 YOE in ER & 30 years old | 5 | 1d |
| +2 | 2+1 -> Start-up -> Publics? | 1 | 6d |
| +2 | Walleye SA 2027 | 3 | 1d |
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If I'm a student in college looking to enter L/S at a SM out of college, what do people in the industry look for? Beyond a good stock pitch and solid resume, how do you convince a PM to take a chance on you?
Good write ups can overcome a lot. Doing unique work that demonstrates edge and differentiation vs. consensus is what everyone wants to see. If you email a PM with a pitch that has meaningful edge, you’re going to get a replies.
After that, it’s maintaining those connections and building on them over time.
Serious question: have you ever considered joining a pod? How do you evaluate the opportunity vs. your current seat?
Not that seriously. I enjoy the day-to-day work of SM much more than what MM entails. I get why people make the jump, but there’s very limited benefit that MM can offer me that SM can’t and there’s a whole lot I’d be giving up.
What exactly would you be “giving up” by leaving an SM
what are your thoughts on MBA students trying to break into the industry?
I think you’ll have to be more specific with what you want to know. I’ve worked with people with MBAs that are great and ones that aren’t great. Biggest thing is they’d need to demonstrate passion for investing/markets
specifically on your firm that you work at, are they open to MBA career switchers or are they usually people already in the industry or straight out of UG?
What's the ideal length of a outreach writeup in your eyes? Is there a market cap at which a >$1bn fund is unlikely to care (I assume your fund is solely mid/large cap)? Also, could you comment on your research process and how that has changed over time? How did you overcome losing a notable amount of money for the first time?
Long enough to cover everything, short enough to keep it interesting. Probably don’t send a 20 page report. If you can get everything important across in 1 page, amazing, but you probably can’t. Focus on the most important thing and the edge, cut out everything else. I don’t want to read a book report or about a segment that’s 5% of revenue.
Market cap probably north of $500m, liquidity more than $5m/day should be okay for most funds to be worth reading your work.
Process, first few years I didn’t have any pattern recognition built up yet so value added activity to my team was by getting more in the weeds on things that senior people I supported couldn’t. Top priority is not losing money, so in that vain as a junior it’s don’t make avoidable mistakes. Now I have that muscle built up so I can spot things “X reminds me of Y which I was involved in the past”
Who said I ever lost a notable amount of money? I kid, I’ve been extremely fortunate to have bosses that made this much easier on me and helped pick me up if I fell
I've seen some pitches on VIC with significantly lower liquidity than $5m/day that have won the biweekly contest. I understand that SMs may not feel comfortable investing in these stocks, but could you still pitch them? Another follow up is that if these stocks don't have institutional interest, how would someone expect it to reprice?
Do you not see the industry contracting? Is there any alpha in fundamental stock picking? Feels like I only see bad news.
Probably is. People have been writing those articles for >10 years and my checks still clear. I frankly don’t think it matters that much and is cyclical.
Currently 32 and working in data/tech in the Middle East. I want to pivot into the L/S equity space as more offices open here. Is a top MBA (HSW/CBS/Booth) the best way in? Any tips or insights for a career switcher?
If you get into one of those, could be a good way in. Also, many have data teams, might be good to start on a data team and try to learn from osmosis. I know a few people that started out as data science people at a SM and later became and investor at a MM.
Helpful. Thanks! Is age as much of a hurdle as people say? Do you see people enter in their 30s at your firm/other firms if they have solid pitches/write ups and a demonstrate strong interest in the space?
Can you give an idea on comp? Do you feel as if there is a ceiling at an SM or harder to move up
For my level of experience in a decent year is $700k-$2m, can go higher in a good year. Comp isn’t really capped for me and just depends on how I do. As far as moving up, I don’t know, what’s that even mean? I run a small team and have lots of latitude to work on whatever I want. Definitely don’t feel like I’m stuck or anything.
6yrs out of UG this is an insane right tail outcome…congrats
What sector(s) do you cover? Do you think you'd be able to pick up coverage of a different (adjacent and non-adjacent) sector relatively quickly?
Generalist, so yes
How much AI is actually used in day-to-day research and automation right now? Given how tools like Claude are simplifying modeling, how worried should new analysts be? Since modeling is just one part of the job, what are the most important 'AI-proof' skills to focus on?
I’m a pretty heavy user of AI to aid research. It’s not quite there on modeling yet, but writing is clearly on the wall. But also, canalyst has existed for a number of years, so not sure it matters all that much. Attention to detail is the biggest skill to develop as a junior and I think becomes even more important in a post-AI world. AI will make errors and you better be the person that spots those errors instead of passing along AI slop to your PM.
Do you worry at all about AI replacing you in a few years? Why or why not?
I don't mean to be facetious but it seems to be a big fear among investment professionals these days. Slope of improvement is incredibly high, I go back and forth on this
2 Questions: (1) What do you think are the most value additive things/skills college students should develop if they want to enter the industry. (2) Do you think doing banking/PE beforehand is needed? What do you think students should consider when determining whether they should go directly to l/s or do banking/PE first.
1-attention to detail. After that, learn what a good stock pitch is vs. a good book report on a company.
2-not required but I would recommend it. I didn’t do IB/PE, but it made things harder. Probably the hardest part is actually finding your second job in the industry since they don’t know if the first job was a fluke or something. You need to have a good network of other investors you develop to overcome that.
Looking back, what are some things you know now that you wish you had known when you were first starting out? If you could go back, what’s the one piece of advice you’d give your younger self starting in L/S equity?
I would probably advise myself to do banking, but I probably would have been an arrogant little POS and ignored myself. All worked out well for me, but seen it really not work out for others.
I’d also tell myself: you aren’t as dumb as you feel when you’re losing money and you aren’t as smart as you feel when you’re making money
Will be interning at a mmhf - what advice would you give for a student to prepare during the year and be as useful and standout as possible? And thank you for taking your time to do this
Make it your goal to make sure the analyst you’re working never finds any avoidable errors in your work. Ask questions, ask to listen in on IR calls, deliver clean notes from the call without them asking.
And for the love of god, if a stock is blowing up on them, try to not ask them any questions right then.
Thank you for the advice. Do you have any advice on the side of becoming better investor/ thinking about stocks in the meantime?
What Sector do you cover
read the thread - he said generalist
Ohh shit my bad
What do you think determines success in the industry over the long term? Everyone (including myself) would like to believe that if you are passionate about the game and have the hunger to keep improving, you will eventually become good. Do you think this is true or you need to have some innate ability that can't be taught?
I wish passion was enough, but sadly it’s not. I think it’s required to be good, but not enough by itself. Being a curious person, having the right temperament to deal with the volatility, and a certain level of intelligence are all very important. A bit of luck certainly helps
What are the advantages of being a generalist in today's market vs. a specialist?
What's been your favorite sector to go deep on? Which one was the most painful?
World is changing faster than ever, sometimes being a generalist helps you approach a sector without the baggage of being a specialist. Good example is power names and AI, a lot of specialists missed a lot of the trade because previous narratives always failed to materialize in load growth.
I also spend most of my time on shorts, so being a generalist on that also helps.
Favorite, niche industrials and med tech. I don’t really enjoy oil and gas producers, downstream and service companies are fine, just not E&P.
do you ever look at therapeutics?
As retail and multi Strat pod flows make increasing % of daily volume, has how you think about catalyst path and how to get paid on a name changed (know u mentioned having duration above)? Structurally is the mkt landscape today functionally different to when u started 6yrs ago (assuming pre-covid, wow)
(+) do you think prediction mkts can be used more institutionally now as signals…?
Retail/memes has definitely changed shorting in the US. Asia markets always had a bit of that dynamic, but had to pay attention to it a lot. Have to choose if you’re going to deal with those names like a trader or if you’re going to deal with them like an investor (also means smaller position sizes).
Pod growth has made understanding positioning more important. Does create opportunities as people are unwilling to sit through 1-2 quarter overhangs for people that can invest with duration. That’s not an excuse to have your longs miss earnings every quarter though, that’s not taking duration risk, that’s just lazy and being bad.
What would you say is your competitive advantage? Could you briefly speak to your idea generation process as a generalist?
This is a common question and the answer is entirely unsatisfying and unhelpful. The truth is my best ideas come from the meandering path of intellectual curiosity, turning over one stone gives me an idea of how something I learned might impact another company, so I start to explore that, and so on down the path I go.
Do you or your fund place any emphasis on screens?
Fwiw, I don't think this is unhelpful. I think it gets at something that's absolutely essential to doing the job well: curiosity and/or applying learnings from one company / sector to another. Isn't really any way to generate a truly differentiated idea otherwise - you're just taking a view on known "debate points".
I definitely agree that this can be a source of good ideas but i don't think "paying attention and I'm a smart guy" is really a competitive advantage. Competitive advantage should be something barriers to entry.
.
Leerink?
What's your advice for someone starting at a MMHF directly out of undergrad?
bump
Thanks for doing this. Any advice on idea generation for a short pitch? Struggling with this more than coming up with longs
Can you give us ticker for best short and best long? Need to make some beer money buddy
Incoming summer analyst at a large SM also l/s. Any tips on being successful?
Also idea generation wise, how do you "time" your shorts? The durable, longer-term sense of investing makes sense with me for longs, but how do you make sure you don't become entrapped in the sunk-cost fallacy when shorting?
bump
bump
There should be signs showing up in the numbers of things getting worse. Revenue missing expectations, margins degrading, FCF conversion getting worse, etc. You should be able to know what metric will show evidence of your thesis being on track before you put on the position. Everything boils down to a differentiated view on a quantifiable KPI.
How difficult is it to lateral into L/S as a VP in IB with multiple prior years in PE? What would leveling look like in this case (call it 4 years in PE as associate/senior associate)?
Also, can you please share what the “carry math” or your share of the performance fee looks like as an analyst?
Biggest issue I’ve seen with people with this background is not getting that you’re in the stock picking game, not the “I did good work” game. No one cares if you made a 100 page deck that’s very pretty if it comes with zero unique quantifiable insights. If you can over come that, then you’ll be fine.
Got it. Yeah, the movement to L/S would be because said VP hates the quantity of material over quality of ideas in banking.
What is the best way to get into the industry without going through the head hunter route? In a MM IB role with little M&A experience, and I don't think head hunters are giving me a shot. Should I cold email analysts or PMs with pitches?
Yes, this is the way. Build the network and research companies
Thank you for your response and this AMA overall. I've heard mixed things about emailing investment professionals, so it is helpful to hear that you think I should do so.
How do you get ideas as a generalist? Secondary sources from other investors (13f, investor letters), or primary sources (your own field work, top-down thinking)?
And what’s your investing style?
bump
I’ve never found a long on a 13F. I still look at them to understand positioning. As far as secondary sources, biggest would be my network. Friends pitching ideas, etc.
A lot of primary sources, my own work uncovering things. That’s probably the biggest source.
Style, I guess you could call it GARP, but takes different flavors depending on the set up. The growth doesn’t necessarily need to be top line growth. I also have a minimum bar for quality for me to want to own something.
Thank you for doing this. How do you and your friends see the career prospects for global macro and/or commodities hedge funds? Given that there is no "stock pitch" and only a few structured paths, such as rates/fx s&t to macro and bp/shell trader development programs to commodities.
How do you tell when a company is going to beat the bar and when they are going to miss the bar?
How do you think about DCF modelling given all the moving parts that can be easily manipulated (wacc,Tv, g etc.) to align with your thesis? And generally valuation?
Hey,
Senior at a target. I didn't get a return from a top tier LO, and now deciding between a ~$200M HF vs a BB IB seat. Founder of fund has great pedigree, track record etc. Obviously very inclined to take the fund since I want to do publics for sure. But was wondering if taking the short term pain from IB is better long term. Would really appreciate any help/advice
That’s tough. Hard to know w/o more detail on founder. But I would lean the tried and true BB to PE to SM. It’s illogical but for some reason you have a better path to the best SMs, and a solid path to very above average SMs doing so - even relative to real HF experience. Unless the $200M place scales and makes a name for itself which is hard to call
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