MM vs Lone Pine/Tiger

Assuming someone is a PE associate with both offers, which is the more desirable place to go (especially given the strength of citadel vs. the large drawdowns of these single managers)? Is MM the obvious choice here?

Comments (17)

Most Helpful
HFPM, what's your opinion? Comment below:

The jobs are going to feel very very different. 

MM will be focused on knowing 30 companies really well, understanding why / why / how they trade out of line with your expectations and then milking 1-2-3% out of the market over and over and over while staying in line with the risk model (early on this won't be your issue to handle).  Seat volatility is high bc pms get turned over a lot and so most analysts work for a few different pms over their first 4-5 years. 

SM will be more broad and thematic research. Trying to find broader trends and compounders. From this description it may sound sexier, but there will be a lot of beta to this type of investing, many of these funds are in tough spots (in part bc of private markets but also public funds). Many people in this role stay an analyst forever because they never truly learn how to manage a portfolio, just to pick ideas/trends. 

So there are pluses and minuses to both. I think you need to understand what suits your goals better and then decide which is best for you. 

Also, specific team matters - some teams at platforms invest a lot in their people. Others don't. There are some platform seats which are way better than others so it's hard to compare as though they're all the same. 

  • Analyst 1 in IB - Gen

Is L/S fundamentals at MM going to be different than L/S fundamentals at SM?

  • 1
herzyherzy, what's your opinion? Comment below:

I think it varies on 2-3 things, 1) what you enjoy stylistically, 2) the direct team you'd be under/working for (PM at an MM, maybe MD at Tiger/Lone Pine), and 3) performance.

1) Stylistically these could not be more different - MM you are confined to a hard list of 30-50 names and are often times responsible for deploying risk or backing ideas on those at any given time with strict trading parameters and a need to position ahead of quarters. That's it. Get used to inputting large amounts of data and meeting with management trying to develop an edge for every quarter. Make sure you have a view on the next 12 months and where guidance will be. You are the be-all, end-all for everything that matters on that stock in the semi-near term. Not a bad thing and these guys can make tons of money if you get very good at understanding the 3-4 core drivers paired with positioning/setups. At a Tiger/Lone Pine (note these are somewhat different in and of themselves), these guys are taking > 12 month (but often shorter than 3 year) bets on companies based on a combo of top-down/bottoms-up analysis. Lone Pine does a bit more consumer work, but likely taking a view on regulatory change / unit economics / misunderstood businesses that should play out in their favor, Tiger is kinda just YOLO-sending a multitude of software co's that were previously private. I'm sorry I don't have better things to say about Tiger's strategy.

2) PM matters, ESPECIALLY at an MM. If they blow out you're done. They dictate the culture. It's likely that you're essentially working at a mini hedge fund within a larger platform and the culture doesn't extend far beyond your PM and direct team. This matters.

3) Tiger is down 60% this year and probably won't be able to raise meaningful AUM ever again. I would imagine once lockups expire they see some redemptions. Pods blow up a ton in MM. Not sure this means Lone Pine is the remaining sweet spot but just be cognizant of performance. Past performance does not indicate future results.

  • Intern in HF - Event

I've been hearing that L/S investing at SM is basically having a variant view vs consensus and making money off that from earnings results.  So how does making predictions on a company's earnings work when you're thinking 1+ years vs consensus and how does thematic/secular investing work under that model?

Sorry if this is too elemantary. Just an intern and looking to learn more

herzyherzy, what's your opinion? Comment below:

I think all investing on a fundamental, bottoms-up approach is understanding 1) earnings estimates, what drives them and how that differs from both consensus and investor expectations and 2) valuation, bit more of an art but what to pay for that stream of earnings. Everyone in a nut shell in L/S is tasked with developing a process to form a view on those two factors thoughtfully, and then place bets according to their understanding and conviction in those. As you noted, the major difference between SM and MM can largely be boiled down to duration, which simply in its purest form explains tons of different aspects to why strategies differ.

I think a common misnomer is that thematic guys ignore earnings estimates. They're making a bet that the secular tailwind they own a company for WILL have material positive (or negative if short) impacts to earnings estimates over time, it may just not be quarter to quarter. 

A good example would be TSLA. In VERY simple, non-deep terms, for a period of time I imagine thematic managers were owning it anticipating their earnings would far surpass consensus estimates due to their position in the EV market, first-to-market strategy, production targets, etc. A "non-secular" SM might short it because their supply chain was challenged, the production targets were too ambitious, execution of the strategy was flawed in some way, etc. Over time the belief is that the stock should be today's representation of discounted future cash flows, and both of those frameworks can help explain it, albeit Tesla not usually trading with discount rates and kind of operates in a world of its own.

The point is, different things matter to different investors and that's part of the name of the game - trying to identify what matters to existing holders or what WILL matter to potential holders. At the end of the day if earnings vary dramatically from what everyone was expecting (street or investor base), then that's where alpha can be generated should you be positioned accordingly. That notion applies to both near-term and LT/secular frameworks.  

herzyherzy, what's your opinion? Comment below:

Commodi doloribus earum et eaque. Optio veniam fugit est impedit nam eum. Vel consequuntur aut quia fugiat eos quisquam. Quo earum quia id commodi earum quia. Modi a occaecati quisquam.

Start Discussion

Career Advancement Opportunities

January 2023 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • AQR Capital Management 96.8%
  • Citadel Investment Group 95.8%
  • Two Sigma Investments 94.7%

Overall Employee Satisfaction

January 2023 Hedge Fund

  • D.E. Shaw 98.9%
  • Magnetar Capital 97.8%
  • Blackstone Group 96.8%
  • Citadel Investment Group 95.7%
  • Millennium Partners 94.6%

Professional Growth Opportunities

January 2023 Hedge Fund

  • D.E. Shaw 99.0%
  • Point72 97.9%
  • AQR Capital Management 96.9%
  • Magnetar Capital 95.8%
  • Citadel Investment Group 94.8%

Total Avg Compensation

January 2023 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (22) $464
  • Director/MD (11) $434
  • NA (5) $306
  • Manager (4) $282
  • 3rd+ Year Associate (23) $275
  • Engineer/Quant (66) $274
  • 2nd Year Associate (29) $251
  • 1st Year Associate (71) $192
  • Analysts (217) $178
  • Intern/Summer Associate (20) $130
  • Junior Trader (5) $102
  • Intern/Summer Analyst (237) $85