Have Shot at HF Job Thanks to Sheer Luck
Visiting my cousin in NYC, he introduced me to one of his buddies. The guy is super sharp, Ivy educated with impressive hedge fund experience. Worked at a prominent NYC hedge fund and now starting his own shop (raised $1 billion in capital).
Anyway, I casually said it would be nice to work a finance job in NYC and he offered me an INTERVIEW for an Analyst position. He said we should speak at his office if I'm serious about moving to NYC.
Currently in banking, specifically commercial banking. Semi-target education. Early 30s. No MBA, CFA or other credentials.
What's does a HF Analyst do? What skills in particular are demanded by the role? Am I too old to be an Analyst at my age? Definitely life changing, so interested to learn more from those that know.
Bumping because this is awesome. Also, that is potentially identifiable info for that guy, would anonymize this a bit more if I were you
Look man im just an intern but this is life changing and I'm shocked its not getting more attention. Hopefully someone who is actually in the industry can see this. Comm banking to a seat at a 1B fund is wild. An HF analyst is a research heavy job. It's your job to be an expert on a certain sector or sectors, whether its consumer, life sciences, semiconductors, you are a domain expert at at least one thing. You have a group of companies you follow and you know them like the back of your hand. You listen to expert calls, management calls, you read reports by banks about the companies you cover and you form your own opinion on them.
You should have a couple public companies you can speak knowledgeably about why they would make a good investment. Look up write ups on Value Investors Club or sample stock pitches. You should have a view that's different from whats already out there, hedge funds get horny for that if you're right. You should have a sector or sectors youre excited about too.
Sorry if this is basic level knowledge but hopefully someone more knowledgable can drop some wisdom.
Appreciate any feedback. Guess it depends on strategy, but doesn't sound quant heavy (unless a quant fund).
What's the strategy?
Check this out - it's a former Citadel PM giving a masterclass on HF skills and recruiting and interviewing. He has a free HF course, I would recommend doing it if you have time.
Best of luck
Will def check out, does he discuss the different strategies?
Unfortunately not, because he was a long-short PM at Citadel so he stays in that realm. He was at a distressed fund previously so surprised he didn't go into that. But then most funds (and seems like this fund you're interviewing for) stay in the equities space so all good.
It depends on the fund's strategy, but assuming your cousin's buddy knows (or at least is vaguely aware) you are in commercial banking, I will assume this particular fund pursues a discretionary, fundamentals-based investing strategy.
Here is what I would advise to a friend who was in the same position as you:
First, go read the short article "The Superinvestors of Graham-and-Doddsville"
Next, buy (or borrow from the library) the 1st edition of "Value Investing: From Graham to Buffett and Beyond" (Highly recommend the 1st edition, even though it's decades older, as the 2nd edition is significantly worse and even nonsensical in parts) Go through this book very thoroughly (e.g. take notes as you read)
Whenever you need a break from the book above (which is really more of a textbook), start reading Warren Buffett's letters to investors over the years.
After you finish the Value Investing textbook and have thoroughly mastered its content (to the level that you could teach the content to a novice), start preparing pitches for companies you think would make good investments for the fund.
Wow, your advice gives me a lot of runway, thanks pal! He knows I'm not in investment banking, but I can hold my own because of genuine interest in finance and constant reading (though Intelligent Investor was really dry).
As hope for others as well, my cousin's buddy said that when it comes to HFs in particular, pedigree takes a back seat. As PM, he was more impressed by the ones that came from the non-traditional (even quirky) backgrounds because of their ability to ask the right questions, think outside the box and optimal balance of high level thinking/getting deep in the weeds. And as a commercial banker, I've been trained to scrutize business models, mitigate risk, assume worst case scenario, price risk accordingly, etc.
What's the diff between the 1st edition and the 2nd? This book is on my reading list
Sounds like an awesome opportunity. Good luck man, I'm rooting for you. Would love an update after you go through the process
Will tackle this from a different angle as those reading recommendations are a great place to start but assuming you might have limited time, I would spend some focus on reading filings and earnings transcripts of public companies you're familiar with, find interesting, or want to learn more about. Print them out and take a pen to them and just highlight or underline whatever you think might be important. Filings will literally explain to you how the business works (you'd be shocked at how few people truly understand what some companies actually do), as well as help to understand financial statements + numbers. Transcripts will help contextualize that to some degree, and at least put a finer point on what the management team has to say about the numbers, strategy, and trajectory of the biz.
End of the day what they'll be looking for is competence in Excel, a desire to learn (and learn by reading, I might add), and an ability to process and digest information quickly and accurately. I have to believe some of what you do now is transferrable to some extent. I think just immersing yourself in filings can really help you start to frame an understanding of businesses and their core drivers. I think the step beyond that, which may not be required for an interview, would be to deduct your own meaning to what those things mean and how they're subject to change over time. All the job requires is developing views on a variety of different stocks, markets, businesses, and assets and ultimately attempting to test out why that thesis may be right or wrong.
Best of luck!
All good points, thanks a ton. I know intensive reading, comprehension and digesting are on par for the course, but is there also a lot of modeling on Excel and stuff as well? Pretty rusty on the latter; the detailed modeling I do now is on bespoke software.
I'd be comfortable modeling quarterly income statements. It is important to have a view on cadences of drivers / earnings and modeling that accordingly.
Awesome opportunity, hope everything works out.
May shock you but it is more common than you think, to start this person thinks very highly of your cousin and for sure enjoyed your overall vibe as well. The issue is you need to now impress all the people who work for him as you did him (highly unlikely he is going to be your direct mentor), so really should stick to you being yourself and why exactly want such an opportunity.
I think a commercial banker has all the skills to succeed in the role and a lot of the specific modeling can be taught (based on strategy), but the main thing to understand going in is that this probably going to be your hardest job in your career. For the first two years you will have to grind like mad, out work everyone and understand that your unique background (analyzing business debt all day) will be a major asset later on down the line but for now it is catch up time. Similarly with your question around age, no one cares about age so do not get hung on stuff like that. People usually in this friend's situation are looking for "loyalty and humility" early on. Every founder wants to look back in 10 years and say those first 5 guys who were with me are still here with me today.
So yes, balancing humility, hunger and unrelenting work ethic will be tough to show but you have clearly already shown it. Best of luck.
Thanks for the advice man! I'm nervous and excited at the same time. Who knows, maybe one day we'll cross paths (can't be too many comm bankers --> HF Analysts).
David Tepper is the exception (and quite an exception at that!) that proves the rule.
Congrats! If you feel passionate about it, go for it!
Skills will vary based on the type of HF. Global Macro, Equity long/short, Activists. Then there are different strategies as well. Quant, high frequency, event-driven, value/fundamental etc.
Never too old to go on an adventure into a new area of finance.
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