SM hours and process
Is it true that SMs generally have fairly relaxed cultures, focused on long run and not really worried about earnings / daily moves? Seems like it is really dependent on PMs and some are basically trading shops that sell themselves as deep dive investors
It's not true.
At my firm every day starts with the new daily data moves. Also wouldn't call it "relaxed".
My firm (>$10b SM) is superficially pretty chill. Senior analysts and PM doesn’t really put much pressure on anyone. It’s all bottom up and self driven so you can essentially do whatever you want whenever you want. But obviously beneath all that, it’s an eat what you kill culture and everyone’s hustling for visibility and PnL. If you actually chill out, you’ll be gone in 2-3 years which I think is longer than most places. Long term investing is nonsense and we’re only focused on YTD PnL everyday.
Could u elaborate what u mean by eat what u kill? Does everyone at ur firm get paid strictly based on the pnl geberated by their ideas? Also is this a long short equity fund?
2-3 years... wow.
tiger diaspora? or another fund?
dead at tiger "diaspora" lmao
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...as opposed to "genius" macro investors who also put up shit numbers over time? Quit the BS.
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Sigh at the millionth time I'm reading this "trading vs. investing" false dichotomy.
The two are not mutually exclusive, you know? You can have high-conviction core position on a 3-5 year thesis alongside catalyst longs/shorts with 6-12mo. horizons. This is probably the more common way most HFs operate than any given portfolio being all-in on one thesis or the other.
It's also particularly aggravating hearing PE associates bandy about how they don't want "trading-oriented" HFs. OK bro... So PE funds don't flip companies in 1-2 years if there is a good bid to hit from a strategic? What about dividend recaps 6 months into hold period? You guys don't spend unconscionable amount of hours adjusting EBITDA and doing QoE diligence so you can pay 5% less (and get paid 5% more on the way out)? You guys just kick back and read the original IC memo and mumble to yourself about some "long-term thesis" when monthly KPIs come in crashing hard from management? When your debt starts trading at 60c on the dollar? It's all good because your thesis will play out in 10 years right?
Investing is investing no matter what flavor of the rainbow colors it comes from... If you see an opportunity to buy something that will be more valuable in 6, 12, 36, 60 months, you buy. If your thesis is cracking and the asset is going to be worth less tomorrow, you look for the nearest exit and move on.
Most of these "investors" that look down on "traders" are really guys afraid of behind held accountable for bad performance. They love to hide their poor performance behind "I have a 10-year time horizon" excuses. When their 10y track record also sucks, they will claim it's about the 20-yr timeframe. And so on.
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Let's not pretend the majority of PMs at MMs aren't just bouncing around from fund to fund, making at least one stop at MLP, with middling performance until they find a managing partner willing to put up with mediocrity or they luck into a successful year (which buys them several more before they get canned again).
As I've described in other threads, you find a lot of shit talkers here on WSO from MMs. They're over-represented because there are a million dime-a-dozen spots at the MM flavor-of-the-day, typically managing pennies of actual capital that's been levered up to hell and back. You know how many of them want a comparable SM role? Every single one. The SM seat has job security, work-life balance, the ability to see through a draw-down without getting cut off (into the period of a cycle where assets become cheap and you can easily deliver absolute returns), far higher AUM-per-IP, and an order of magnitude higher compensation. SM risk-taking seats shit on MM seats and consider yourself lucky if you land one. So all this derision of SMs is just jealousy manifesting itself.
i think youre broadly generalizing here as was the MM PM . i work at a SM myself on the event driven side and your points on job security and hours( although this is pretty self imposed) are pretty correct but i can assure u that SM risk taking people are not making an order of magnitude in comp compared to decent MM PMs managing a 1-2 billion book with decent returns who can clip 10m+ pretty consistently if theyre really good.So not sure why theyd ever want to go and be an analyst at a single manager if theyre already great at MM structure.So what u basically did here is got all defensive because of the other guys comment and decided to trash him and MM people without any real context rather than portray a good idea of the pros and cons of both structures
$10mm+ consistently in MM is quite a stretch. 3% return, even with 20% of PnL (which is high) is $6mm off of $1bln before taking out any expenses.
very few people "clips" 10 mn in MM, very few in SM as well
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