Skip banking for this HF? Need advice
Hi, I just finished my summer at CVP / EVR M&A / PJT Rx. This past winter, I also interned at a 2-5B AUM hedge fund. I now have full time offers at both and am not sure which route to take. Of course I would love to skip the shitiness of banking and get to a better seat right away, but I am unsure about giving up the chance to recruit at other funds. Is the 2 + 2 -> HF worth giving this up? Not sure that I want to be a shell of a human for 4 years just to say I work at Elliot or Viking. For some more detail -
Pros to the HF
- Interesting work right away
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Both equities and credit investing will be an option long-term (fund has multiple strats)
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Good track record of returns
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Few great mentors and good culture
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Comp (300-375 all-in year 1)
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WLB: 60-80 hours/week, but with much better control of hours than I had this summer in banking
Cons to HF
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respected by those who know it, but not a big name
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lose the chance to go wherever I want (assuming I interview well) from CVP / EVR / PJT Rx
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committing to public markets investing before I need to
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expected to perform right away
Realize this is a good spot to be in. Thanks in advance for any advice.
Edit: went w the HF. Overall just enjoyed it so much more than banking and the quality of learning, WLB, and pay made it hard to justify not taking. Ty all for your input
I would personally 100% go for HF, but I am also not optimizing for maximizing risk-adjusted career earnings, as you would do by going IB->PE->HF
depends on how sure you are about wanting to be a HF investor. basically will be tough to do PE if you join the HF right away
I'd look at things in a different angle: Job prospect & optionality.
On sell side:
Things should be fine, EBs have lean structure anyway. You'll learn all the skill you need, more optionality. Exit to PE/VC. You never know what you'd like after having exposure in PE, you may end up like it more than HF or want to sink deeper and rotate to VC.
You can still have a very good exit to various types of HF, Especially if you're placed in RX and want to do Credit HF. Other HF strats (Merger Arb, L/S Equity Hedge, Activist) tends to fit people coming from IB.
On HF side:
Take a closer look at that firm strat. Next 6 months will be very quite challenging for HF industry as a whole. I saw shops blowing up here and there, along with analysts/traders being churn out from shops downsizing/turning into FO.
I suggests do more DD on the firm you plan on joining, you interned there so you should know. If that firm performs okay in the last 6 months then you can have some confidence it would stay afloat going forward.
HF strats that I recommend jumping on in this market conditions: Quant/Volatility, Global Macro, Credit/Distressed (fund dependent), Multistrat (also fund dependent).
HF strats I recommend you do further investigation before joining: Equities (especially if they're deep in high beta stuff: Tech, Mid-small Cap, Emerging).
IB sucks, yeah, but only join that HF shop if you're confident in their strat. If you're on fence on their performance going forward, then probably do IB for two years. What sucks more is doing HF then it goes under, and you're left with less than <1y HF experience and no banking experience.
Thank you for the detail, really appreciate it.
The firm is multi-strat and I am fairly confident in performance (given historical returns dating back ~15 years). So confidence in the HF isn't really an issue for me. I am more worried about liking GE/VC as you mentioned. I really like public markets, but I don't have 100% conviction that I'd like it better that growth investing. However, on-cycle PE recruiting seems to be so early (right when you start) that I question whether or not I will even have a much better idea of my interests in a year from now.
I assume trying to pivot to growth investing from a HF would be extremely difficult (maybe summer of EB will help with credentialism) or require B-school? Thanks again.
Don't really know, but it's probably easier to go from public equities to GE/VC than to buyout because it's less technical in nature? Provided you're doing growth equity on the public side
can I PM?
1. Yes. TC
2. Depends - could progress to senior analyst economics (steady increase in base + discretionary bonus) to high-6 low-7 figures or essentially MM PM economics (but without drawdown axe condition)
3. Not lean, but that's b/c fee structure is 3 and 30 (because returns have been always been good)
4. Good. 8 - 18% last 10 years I think
5. I'm not sure. That's what I'm trying to figure out. Seems like at the HF the comp, investing exposure, and WLB is better. But, MF PE gives name brand + optionality.
I'm pretty sure I know exactly which fund you're talking about. A good friend of mine interned there and loved it; it's a very personal decision based on optionality but I wouldn't worry too much about brand name if it's the one I'm thinking of.
Lol, I know where you’re going, and I wouldn’t listen to these risk adverse nerds who will still be hunting for exits opps and fulfillment forever. Take that Hedge Fund seat, congrats!
This industry is at its core all about taking calculated bets with imperfect information - this job offer seems like a pretty good one.
Hedge fund and don't look back. A seat like that would be a great outcome from MF PE
Does this hedge fund start with an “F”?
Sorry but not gonna give more info - don't want to dox myself. Info I gave above prob narrows me down to <15 kids already.
P I think
Doubt its Farallon based on info given.
Dont know why you thought it was Farallon - not what I was thinking
I am a rising senior signed to a HF and I thought about this the exact same way. Had an offer to a top BB group and I think for me it came down to figuring out if public equities is what I wanted to do as soon as possible. If it is great, if it’s not i’ll do everything I can to make the jump to GE/VC or go business school and try that way. Just would’ve hated to go IB PE HF to than figure out it’s not for me. I plan on going expressing that I want to cover growth tech to hedge in the case that I want to make the jump.
The way to think about it....is this a role that you would take if you got it coming out of one of the banking programs that you had mentioned? If so, then take it now. If not, go banking.
Easiest way to make the decision, definitely agree
And what if the answer is "no, but it's close and I'll be 2-4 years ahead and can enjoy my 20s far more" ?
Honestly think if I stuck out EB + MF PE then I could end up at an Pershing Square / Tiger Cub / Elliot type of place. Just not sure if it's really worth it.
Honestly, from the first comment my call is take a shot at it. You will know a year in if it’s for you and if it’s not, worst case scenario you go to banking and figure it out. An early hedge fund shop will get you credibility and you can grow in the business. I am sure if you’re a rockstar than you can go to these said tiger cubs/pershing square type shops but maybe I am misinformed
There will be always more people who have done EB + MF PE than number of the people who have worked at an elite SM HF. So doing 2 + 2 only make you eligible for a shot, but not even close to a guarantee.
hominem gave you the best advice. If you really believe "no its close". You should really try to contact someone at a Pershing/Tiger/Elliot and get their opinion. There is nothing to say you like the culture of those places and nothing to say when you join them you will be on a magic ladder to the top versus others who work there.
The reason those places are strict on recruiting is only due to that most funds do not like to retrain someone else's culture and style. They much rather prefer to get to someone fresh. Just like maybe this current fund prefers fresh new grads versus those who worked in banking and so on.
you should check out the threads on HF vs. PE career paths. there seems to be a growing consensus that PE is a more stable and better risk adjusted career path. it's hard to know what you want now. banking offers the most options and pathways
How did you find this HF internship? I'm trying to get one of these but not sure where to start. Did you cold email?
School portal. There are a handful of MM pod shops that hire undergrads plus 10-15 other well respected shops that do as well. The latter typically have a short list of target schools and are often way more nitpicky about them than top banks. Cold emailing might work for some random funds, but these are probably less likely to lead to high quality FT roles out of undergrad.
Don’t.
Por que Pizz?
btw Aren’t you at at AM? Lot of posts from you indicate you regret this route (CFA, buyside, etc). You planning to stay in this space LT or something else? Just curious
I'm at HF. If I could re-do my choices, I would've just gone through the IBD --> PE route instead of just HF. If you don't like volatility in your income/job security, this ain't a good line of work (wish I knew this before coming in). Also a big portion of your career success is dependent on things out of your control (PM's ability, LP's patience, market cycles, etc), which makes you sometimes want to rip your hair out
If you're very sure that you want to work in the HF industry for the next 10-20 years (realistically until you retire), then I would say take the HF offer.
If you're at all uncertain (e.g., you may want to do IB/PE/VC) or you're just genuinely uncertain of what you actually want to do, then I would do the traditional 2+2. Part of the reason why 2+2 works is because it gives you more time to be exposed to these industries in a professional setting (i.e., not just reading on WSO) and gives you time to figure out what you actually like to do.
On the other hand, most of the people I know who were really suited for the HF industry knew it from day one. If you're one of those kinds of people, I would say there's absolutely nothing wrong with taking the HF offer. Understand that if you take this route your options will be fairly limited if you burn out or decide you don't actually like the job.
great advice. don't look down on banking by the way, you do come away with some great skills, even if they're intangible
Facing a similar choice (between a VC/GE shop and some interesting HF opps, though, rather than between banking and HF.) Would love to bounce ideas and see how other students are thinking about these choices, so please feel free to pm me.
I was in similar shoes, I had to choose between BB IB, VC, and an HF offer.
I ended up going the HF route, since I was always dead-set on the HF world. IB teaches a fantastic skillset that will be useful throughout your career, but tbh many people go into IB to get to the buyside. I've never really cared about the firm name, since to me personally comp is what matters at the end of the day.
Ultimately your career will be fine whichever way you end up going.
Also there are some major WLB advantages in working public markets. I'm off whenever the NYSE/Nasdaq are closed, and I work 40 hrs most weeks, except during earnings season, even then it would be maybe 50 hrs tops.
This is obscene, how do you only work 40hrs on a typical week at a HF? I can't think of any HF where you work less than 50hrs a week & the top ones are at least 60hrs if not 70+
Well I guess you just heard of one. We're not a big name, nor do we manage billions upon billions of dollars.We are relatively well know for our particular strategy, and geographically we are solely U.S. focused. All of our back office/ middle office is outsourced. Small headcount, but we manage over $100M per seat, so TC is decent, slightly above industry average from what I've seen, substantially above my BB IB offer though. We run a highly concentrated portfolio, with extreme conviction ideas. Not a place where we're running 20-30 names. Less than 10 names. Probably limits the amount work drastically.
Theoretically I'm available 24/7 via phone & email, and I never shy away from work related matters (whatever/whenever); but in practice, 80% of the time, I'm only really "on-call" during market hours. Personally, I keep a thumb on market moving events 24/7, and will circulate them with others in my firm as they arise. Technically necessary for the job, but I did that since I was literally in my teens anyways (so wouldn't quantify that as "work").
This is the only hedge fund I've ever worked for, so I can't compare it with hours at other places, or even the industry average (since I don't know it). My guess is they could vary drastically depending on the strategy. I was in VC before this, and worked similar hours. I was told our WLB is slightly better than other places. The irony is that when I was in b-school and hunting for opportunities, WLB wasn't even remotely one of my priorities lol, and when I was told WLB is better than average, I didn't even care. I was way to obsessed with money as a student to think about it. Now that I have it and I compare my life with my friends, I'm slowly starting to understand why it's important.
What’s your comp? And comp at higher levels? If may ask
If you interned at the HF and think you had good relationships / can be successful, take it. Every time you move around, you risk a fit issue, even if you're a rockstar on the intellect side. A lot of folks leave Elliot and Viking to be senior at a place like you're describing. Also, I would never bank on getting to Viking or Elliot in 4 years
Congrats on the offers. Can’t really go wrong. But the assumption I’d question most is where you effectively say that 2 yrs at those IBs puts you in the driver’s seat while you (at least implicitly) say that you wouldn’t have the same optionality if you wanted to leave the fund.
I totally get that thinking and it’s a popular view. But I doubt it’s actually the case. You’ll learn more at the fund. Most of the other jobs you’d want (i.e. jobs where you are hired for your brain), you’d be better prepped coming out of the fund. Not to mention the fund gives you the time needed to actually figure out whatever you’d do next.
I’m not sure the IB pipeline is that important. Sure, stats show a natural pipeline of top talent from IB to good buy side shops. But that’s because the raw talent at that age is mostly in IB. If the talent exists elsewhere the firms are smart enough to accommodate.
you probably won't get much training at the fund
Compared to advanced logo placement certification course that is much of IB, I think the fund will keep up just fine.
Or maybe not. But my only point was, if there’s one part of OP’s thought process where I’d poke a bit, it’s that part. I wouldn’t just assume the IB roles are going to mean more flexibility/choice around exits later.
Yeah this. The only thing you really “give up” is maybe large PE shop which has such a structured way of recruiting. Even then, MBA reset solves this problem if it’s what you decide to do.
The myth of “banking training” is just that - a myth. Do you gain a lot of soft skills and get exposed to corporate finance concepts? Yes, but same is true at a top HF. But the official training portion is just 3-4 weeks of glorified WSO modeling module. You can absolutely learn this on your own. The rest of the time you just network and get drunk with your analyst class.
You can most certainly exit to GE/VC or even startup/corporate if you wish from HF. You just need to be able to tell a good story around how it ties into your sector expertise. Banking is the same. Energy IB kid trying to break into Tech startup is gonna have a hard time, vice versa with a TMT kid looking for clean energy VC.
What’s important is how valuable you actually are. After 3-5 years, you’re no longer judged simply based on which logos you collected on your resume. You actually need to have skills and knowledge to be relevant anywhere. Take the job that will get you there faster. In this case, it sounds like the HF
May be worth reaching out to Brett Caughran on Twitter. He's been incredibly helpful via his threads and his DMs seem to be open. Former viking/de Shaw/citadel
An HF that's dishing out 300k to you as a first year, is a solid name, has good returns, good culture, and solid WLB balance? I would take it and never look back.
Also, I assume you come from a top target? curious how you landed the HF role as an undergrad
Interested as well.
Not gonna say where I go, but there are a finite number of legit non-MM hedge fund seats out of UG and they are typically pretty exclusive to top targets. If u have a friend at H/Y doing finance stuff, they will typically know of the seats. It is possible to break in from other schools (and it does happen), just at a disadvantage and some places will be unattainable since they won't make application available to all.
Reality is though, if you're a top kid ready to contribute right out of school (the bar for this is higher than most kids can conceptualize without seeing it first hand) and have a great resume, you will get looks.
Can also add that any of these seats (the non-MMs) that are legit, high-paying, high upside out of college are typically tough to get full time offers at. As a result, it can be better to do these internships as a sophomore or in the winter (even though this is usually not an option)
Off of the top of my head, here are the funds (pod shops not included) that are legit and hire top undergrads: Bridgewater, Abdiel, Silver Point, Matrix, Weiss AM, Bracebridge, DE Shaw, Farallon, Maverick(?), Waterfall AM. Sure there are a few more that I am missing. There are threads on this I bet. Anyway, not easy to land any of these. I kinda ended up with a more random one with some luck.
Every hard worker attributes his success to luck. I'm sure you have put in the reps. Kudos.
agree but will say im not at H/Y/P but still top 10 and we have recruiting for most of those funds so its possible for a lot of kids, congrats on the offer dude
I went straight to HF out of undergrad and it was the right call because I was certain public equities was where I wanted to be. If you're sure, definitely go for it. Just make sure your accounting is strong (sounds like it is based on your internships) as you will not necessarily get a formal training program or hand holding when building models on the buy side. Outside of technicals, the "stock IQ" you will build from being in the craziness of the markets for an extra 2-4 years will be invaluable. Getting right into the game now will give you a leg up on everyone else your age down the road. Good luck.
Would echo MacroJunkie above, somewhat depends on what you actually prefer LT. Banking can be largely revisited down the line in a few years as an associate / post-MBA though, so it isn't completely out of the way. And being an investor in a public markets seat should have a little bit of prowess in terms of PE, albeit not a ton of direct transferable skills pertaining to the transaction process.
With that out of the way, I also went to HF out of undergrad over doing IB FT having done the summer analyst stint. I landed in a phenomenal seat in a fund of < $1bn and am now a senior member of the investment team ~4-5 years in, doing deep thesis/bottom-up work across a variety of sectors all in equity public mkts. Money aside, I very much enjoy the day-to-day far more than I had (yes, intern) in banking. Hours aside that also applies, I'd do this job 100 hours a week and have no complaints. I don't need to because frankly there's likely some level of diminishing marginal return to time spent vs. PnL/idea generation, but just trying to highlight my mindset when evaluating career options.
Banking is (no offense) a job that most people can fall into and if they're smart & hard-working, can find a way to succeed in that business especially at the junior levels. Hedge funds are kind of the inverse, juniors need to be smart, hard-working, and large value adds to PnL otherwise they're expensive wastes of capital/resources. The risks are inherently different in each seat: junior IB professionals need to be cordial and coherent in a client-facing setting, not profit centers or generators for a fund's return. So the stakes are higher - just something you should know as it's a different offer in terms of what's required.
I'd say longer term, if you think you'll likely be in a public markets role as MacroJunkie wrote then you should jump straight into the HF seat. If there's more curiosity or interest in potentially going a different route and you're less certain about your 5+ year outlook, do banking. You'll at least have more optionality to have more conversations across a wider range of exit opps. Joining a HF isn't a death sentence as this advice may make it seem, it's just a very specific set of skills that seem to be marginally less transferable than what you learn in IB/PE (which serve as a base for corp dev, VC, etc., as well).
Then the last thing I'll add is the burn-out in either is very different. HF burnout is "hey I'm not generating alpha / PnL anymore" or "I'm spinning my tires working on the same 20 ideas" and those people tend to get very uncomfortable with either lacking performance or lacking creativity. The IB burnout is being a cog in a machine where it's a "necessary evil" but you're playing for the grass being greener scenario, with horrendous hours and often political cultures. If you can weather that storm ideally the PE route can be at LEAST slightly better (not always) but the work gradually becomes more interesting as you progress, carry becomes involved, etc. I think the "risks" to the HF are either 1) that fund doesn't do well and so comp upside is limited and/or volatile, 2) you dislike the role or PM and prefer to be in a more operationally focused role, or 3) you aren't good at it (only you can answer this before getting into the role). People best suited for IB/PE roles tend to have deeper interests in company's operations, transactions/deal-making, playing CFO, etc. People suited for HF tend to be a bit more macro-oriented, varying by strategy but closer to "sectors" than they are "companies" - i.e. how does the IRA impact my E&C names respectively and which should I be long or short?
Hope this helps.
W comment
Comp?
I work in public equities doing bottom up research and took my current job over an IB FT offer.
MacroJunkie and herzyherzy both make excellent points about the long term thinking of your career. If you think this is what you want to do, I think the benefits of taking this job right now far outweigh the possible downside risks.
I understand the feelings of wanting to do banking anyway though. So many of my friends were going into sexy banking jobs, and I was considering going to do bottom-up research at a large LO. For me, there was not just the career de-risking aspect that made banking so appealing, but seeing so many others go into that space most likely clouded my better judgement. Once I realized this, I tried to be as objective as possible about what made the most sense for me at the time.
I walked myself through the scenarios: What am I losing out on in taking each offer? What if I made the wrong decision? What if the job does not work out? What if I suddenly wake up tomorrow and want to do PE? I actually did play each of these out.
I realized that more or less the LO offer was a serious rarity that people across Wall Street vie for, while attaining another IB FT would require effort but was certainly attainable. This kind of LO opportunity may never come up in my life again. And if it didn't work out, I would go back and recruit for IB again or head to one of HSWCC (or another business school) as nearly half of the junior investment staff at my company do.
To add to this, you'll learn more about a role you're dedicated to earlier than your peers who are doing the 2+2 and find yourself in a few years with a lot more true investment experience under your belt. If you take the HF offer, make it a learning opportunity for yourself.
And lastly, as someone else mentioned, I would reach out to someone who currently works in a job you might consider a "dream job." I believe you mentioned Viking, Tiger Cubs, or Elliott as an ideal shop. Talk to someone who works at those shops and get a well informed opinion of their career, starting right away vs. 2+2, the quality of your shop, and other career oriented questions. Ask them, if hypothetically they ran their own SM HF, would they hire someone who had the kind of experience that shop (the one that gave you an offer) might yield. I did this with someone and they were brutally honest, but it mostly solidified my belief in taking the LO offer.
Happy to talk more if interested! Cheers!
Hi! Could you please answer some of my questions in the private messaging section? It would be really helpful for me.
Congratulations!!
I was in the same situation and did banking, was bad at banking and ranked poorly, very nearly derailed making it back to hedge fund. Do the hedge fund, don’t put yourself through that.
The worst part was having done HF internships before, I didn’t even have the illusion that the banking work was cool or important or anything other than total BS.
Catch a staffing with the wrong person, and it’ll interfere with your ability to do cases for recruiting and you’ll be knowing you could’ve just gone to the fund and now some tool VP is grinding you on stupid comments at 3am the night before the interview for the job you were aiming for in the first place. You will regret it. Waste of time. Waste of money. Different skillset. Only risk.
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