PE fund vs join SM LO Fund
Have an option to join a value oriented top quartile value oriented PE Fund or join a SM LO. Coming out of banking and know I want to do publics long term?
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PE and it's not even close. You'll make multiples of what you'd make at such a subscale LO HF and will have better BSchool/recruiting chances to better funds after the stint there.
Ty. Have followed lots of your advice so really appreciate it. Pushing back a bit but don’t you think if the fund doesn’t perform you can still find another publics seat if the founder vouches for you? Or bschool find the non traditional path of 2+2 to be more enticing? Or is this stupid pushback? Thanks again.
Wouldn't say stupid, just ignorant, which is understandable given you're young.
Even if the fund DOES perform there's no telling you'll be able to move to a better public seat. Starting out at a small fund is a crap shoot even if the founder will give you a positive reference when you try to lateral. Regardless of performance you will 99.9% of the time make more in PE and if the UMM/MM fund has an established track record/strong reputation, it serves to check the box of competence + you start to learn a bit of the investor mindset while not developing any "bad habits" that another public seat would have to think about while training you to do things "their way." BSchool will not give a shit about some no name $150m fund, that's a nothingburger because there's so many of them (barring the founder being an alum + on some important committee). 2 + 2, while by no means a guarantee, makes you more of a known quantity and will generally play better.
Also just in general, when I think of "value-oriented" UMM/MM I think of HIG - an ASO program comparable to theirs would put you in a very favorable recruiting position for any buyside seat afterward.
The fact that you are asking this question kinda says you aren’t so super crazy committed to public long term. If you really wanted to do public’s so badly and have a public offer I figure you would take that. Seems like something else is driving your decision making besides just aspiring to be a public market investor. Maybe it’s just making money or something else. Idk. In that case, yea PE sounds like the safer choice. Rooting for you. Good luck.
def am committed but am very young in my career and want to preserve the best optionality in case sht hits the fan but know in heart if hearts im intellectually engaged w publics far more than pe. j want to make sure the risk i take to jump into public away from a named pe fund wont derail my career longer term if i stayed in pe and then went to publics.
How confident are you that the PE fund is actually top quartile? Everyone says that (same thing with value oriented) but there are a few in Boston that are either actually performing very poorly and/or pretty horrific culturally even relative to other shops. Can you find their returns on calphers or similar database?
You can go to HF post PE but some HFs don’t like taking junior investment professionals from other HFs… they’d rather get someone homegrown or train a PE investor to think about publics their way.
I’d also factor in NYC vs. Boston. NYC is 10x better for network. Mamdani getting a lot of headlines but Boston is having its own fall off (and with longer data trends to back it up).
Top quartile by calpers and PitchBook. So you’re of the opinion perhaps better to vet it out through PE and delay the decisions until later? Perhaps in line with the other folks. Am j worried that if I get burnt out from the lack of passion from the deal making side that I won’t make it to publics when the research process in itself is more engaging. Perhaps may have to wait for a better publics opportunity then, more scale I guess
Deal making in UMM/MM+ is just paying more in an auction in 95% of cases. It’s super competitive these days. You can still find enjoyment during the learning curve as it’s a good skillset. Losing passion happens later, burn-out can occur early tho.
To answer directly… yes, that’s what I think would be best for you. I’d start recruiting for HFs 9 months into the PE gig and find one you like. $150m AUM is a little low to start. Have few buddies at smaller hedge funds now and they are loving life but they already made enough money to trade PE grind for something more engaging.
$150mm SM LO is subscale and LO is a structurally declining industry. The SM LO will probably struggle to gain scale. Take the PE offer.
PE with brand name will open more doors to public’s than 150mm LO, both to MM SM and other LO. Different if it’s a well respected big name fund but sub scale and risky and tend to have less upside than you think
There's no reason in any world that you should take HF offer over PE. Don't be stupid. Take the PE offer.
PE
People who work at $1B AUM SMs are scared their seats are going away due to AI and industry pressures...I cant imagine the lack of stability that comes with such a sub-scale SM. Id go PE, also seems like its much easier to jump to HF from PE and not the other way around but open to pushback here.
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