Pod blew up. PM launching own fund, promising a sleeve + carry. ~$500m AUM already raised. Am I dumb?
Should I not just jump at this and start building a track record? Setup is basically as follows:
- Spent 1 year at a MM (extent of my buyside experience, 2.5y IB before), we hit our draw down and team shut down
- PM has raised ~$500m under large capital allocator’s umbrella with flex to raise more externally from year end
- Exact economics uncertain but PM is promising sleeve in 1 year + P&L attribution
I initially wanted to recruit for other MMs for the CV insurance. I trust my PM’s process but it feels too soon to take a risk like this. On the other hand, I don’t have kids or a mortgage, I’m 26. Maybe now is the time to take a big swing at it. Almost feels dumb not to try it the more I consider it.
Someone smarter / saner than me please feel free to weigh in. FWIW leads are 2 other pods + 1 SM that have reached out already with open seats, but I have yet to do any processes.
Tough spot to be in. Following
why is it too soon to take a risk like this? What will you learn from other Pods / PMs that your PM can't teach you. Why can't go you back into another Pod if your PM's new fund blows up?
If you're joining a Pod, are you looking for the base salary or the upside? Does haven't another MM's name on your CV actually help?
Thanks
Frankly I’m grappling with what feels like more career stability (ie keeping brand name by going to another MM) vs. what feels like a big risk. At the end of the day, drawdowns happen the same way at a pod, so the r/r of going for the new launch is probably there.
Question is, in the downside scenario where we wash out after a year, is that a difficult pitch to get myself back into a brand name fund. Base salary de minimus in my thinking
why does brand name matter in MM world? Aren't you assessed by your P&L / ideas?
Honestly I feel like taking the role seems like the best choice. The question is really if you believe your PM that you would get a sleeve in 1 year, not if you should do it
Take the role. You are not at the point in your career where prioritizing for stability should outweigh rolling the dice on a high right tail option. I was in your situation some years ago and took the job. It didn't work, but I'm glad I did it and my career prospects weren't harmed, probably boldened if anything because you can say you did it. Now I have a wife, kid, and mortgage and would not be able to take that swing if presented today.
Helpful perspective. Thank you
100%. There’s a scenario where you make $5-10 million across the next 5 years. And if you blow up spectacularly, you still retain the option of finding another MM seat. No one will fault you for swinging.
Roll the dice often and early in your life. Do it.
If your PM is smart and you believe in his process, do it. If not, don't do it.
Is this Cander Asset Management?
If you believe in the PM and like to work with him, I think you should consider it very seriously.
Best case: he crushes it on his own and takes you on for the ride
Worse case: it doesn’t work and all the MMs you’re considering now are still there and hiring.
Took a similar risk but before the capital was committed and without faith in the PM's process, mostly did it for the opportunity to manage a sleeve and continue working with the same pod in a new setup. It paid off materially, and am now at a MM in an equivalent seat to your PM.
In your shoes it seems like a no brainer, the continuity and opportunity to build a track is much better than having to learn a new process, rebuilding your credibility, and taking the risk that your new PM is bad. Having P&L attribution and more years under the same PM (who is giving you additional responsibility) will put you in a better position to recruit at a MM down the line even if things go wrong vs. if you take a new MM opportunity now and it blows up in another year you will be in a tight spot.
My general advice is try and stay on the same team for at least 3 and ideally 5+ years if you have the opportunity to do so and nothing obvious is broken, tenures of that length will help your career a lot vs. collecting a circus of brand names on the CV.
As an aside, the game theory of your seat is you have two bets on, your performance and your PM's performance. If your PM crushes it and your sleeve does poorly, given you joined them early on after a blowup you probably won't get fired / will get the opportunity to call it a "failed experiment" and stay on as a regular analyst on a successful team. If your PM does poorly and you crush it, you can just take your track and recruit. This optionality is worth a considerable amount and it sounds like you might not get charged for it.
Just take the shot, you puss.
I'll take a contrarian view. 2 years buyside experience is way too early to take on a sleeve. In 90% of the cases, people will fail managing a market-neutral book with such short experience.
If your PM fails to deliver on his promise 1 year from now, you've been duped.
If he delivers on the promise, you will likely fail and then you own that failure since it was your P&L, not his. Now you're a junior PM that's blown up once and getting re-hired somewhere else becomes a lot harder.
Also amused you say you trust your PM's process when you've seen him blown up in just a year with him. Beware perceived "black swan events", experience teaches one these are a lot more frequent than you'd first think. Maybe his process just can't withstand sharp factor unwinds that happen quite regularly.
Not in HF but went to a new fund following my manager. Working out so far and never looked back. Can’t eat pedigree.
wso is the only place where people regularly debate once in a life time opportunities versus the path trodden 10 billion times
(Ignore tag - am in IB but analyst class made it to HF etc.)
Didn't MS you, but OP's concerns are not unfounded - pedigree/branding especially at the start of one's career is a very good baseline and protection. Know many people who washed out and found a job just due to names, and also some which had good experiences and are far more articulate/better than most peers but didn't have chances due to going with a less well-known name.
Ofc it's more applicable if you want to do something outside of a certain field, and it's not as applicable to public markets (relative to private where it's all about the brand), but it matters enough for people to have second thoughts.
Maybe a dumb question (I'm not in HF currently, just a hopeful) but is it really considered a "blow up" anytime someone hits their drawdown? I've always thought of a blow up as the fund took a large, often leveraged bet that took out a big chunk of the fund (e.g. what happened to Tiger Global a few years ago). With how strict some MM drawdowns are it doesn't seem like it would be that unusual to hit risk limits in the short term (like a quarter or two) and be asked to leave as a result, especially in highly volatile markets like these, but that doesn't feel like it should carry the same stigma as the former described situation.
@OP
IMO this sounds like a pretty great situation to find yourself in given the circumstances. PM clearly likes you. He's already raised a solid chunk of capital to play with. He's promising you a sleeve and direct P&L attribution in a year which given you have less than 4 YOE sounds AMAZING (super unlikely you'd find many PMs making that promise to analysts w/ only 1-2 YOE).
Your CV isn't going to look materially better just because you went to a different MM unless you somehow knock it out of the park. Coming in with just 1 YOE probably won't put you in a position to do that. An actual risk-on role where you can start building a track record would go much further in improving your CV, opening lateral opportunities, and just generally improving your skillset.
If I were you I'd be reflecting on these questions:
Godspeed man and please, share an update when you make the decision!
take the offer and don't look back
The scare resource you possess is youth. That’s your only comparative advantage to anyone else who might take this job. Take it and don’t look back. Worst case, you go back to the conventional path in 2 years.
Assuming you trust the PM, this is a no brainer.
Replace "youth" with "inexperience" and see what your post looks like.
We're taking about risk management here, not athletics.
Agreed. Replace it. Your downside is two years of below average comp. The experience you get — again, assuming the PM is excellent — is invaluable.
From a risk management perspective, you have capped downside and levered upside. The conventional path will always be there…
Get ur fuckin bag and move to SE asia if it blows up after a year
everyone ITT just ignoring the fact his PM blew up and somehow can raise $500m and wants to give a 1 year analyst a sleeve...? none of this makes sense
While I don't disagree, some PMs are hella articulate and caa definitely sell well - know a few that had second chances despite just being shit. Good chance this $500m is gross/post-leverage too. If it's a LARP-ing post it's such a dumb situation to write about lmao
right?
$500 is pretty good for a first raise. Sounds like a good opportunity....
However, no promises. It's either written down in paper or it doesn't exist. Don't care how swell of a guy you think he is.
Take the risk. Looks like a positive EV move.
I think you should take the so and so “risk” because at 26 you have so much left to learn and I think this would be a good learning opportunity for the long run. Also in my opinion, I think it would be great to take on such an opportunity in general since you could always revert back to another opportunity later on based on previous experiences.
Did this a few years ago. Currently out of the industry (as you said, very hard to come back from two back to back blow-ups) and have been unemployed for 11 months now. Both were brand name MMs (big four).
Mollitia aspernatur veritatis cupiditate fugiat. Et alias qui quos. Nam ab amet maxime ad quam laborum quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Voluptatem consequatur et nostrum quos. Nihil non est veritatis hic aut. Veniam fugiat qui fugiat cumque at nesciunt ab voluptatem.