When you're trying to break into the HF industry, at the lower levels (i.e investment analyst), how critical is it that you know your preference about equity vs. fixed income and whether you are interested in specific strategies, such as merger arbitrage, global-macro, fundamental value, etc. or can you be more of a generalist who wants to get a little bit of everything before specializing?
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Seems kind of important.
Haha ok - maybe the better question is how do you go about figuring out your niche then? it seems like theres a lot out there to specialize in.
this is why you do summer internships one summer in FICC S&T or research another summer in equities S&T or research that should help you figure it out
A lot of people recruiting into the industry would probably be alright doing one of a few strategies. The reason people concentrate is not only because you're more interested in one type of investing, but that recruiting is hard. To make yourself a viable candidate for a merger arb, macro or fundamental credit group requires entirely different skill sets that take a lot of work to build. Are you going to have viable pitches that you're prepared to explain and defend for each strategy? When they ask you about your investment philosophy, are you going to be able to give one catered to each firm that doesn't sound hollow? When they ask about your story, will you be able to give one that logically builds to recruiting for each of those firms without coming across as disingenuous? How many investing books are you willing to read, because value, arb, macro and credit all have different "bibles" so to speak. You'll be recruiting against people who's singular goal in life is to land that role, do you think you can beat them while juggling everything else?
Not only all of that, but those firms want to hire someone interested in what they do. If they sense you're more interested in getting into any fund versus their fund, then you probably won't get it.
Damn - thanks for that. That makes a lot more sense now. Maybe a stupid question but definitely appreciate the insight there. Do you have any recs for any merger arb books?
Nah don't worry, you're not the first person to think that. I'll be recommending books I haven't read myself here, but if you want to dip your toes in the water without diving into a technical book "Merger Masters" is a book that came out recently highlighting some of the big players. There's also a podcast focused on arb that has snagged interviews with a couple of guys from that book, link at the bottom. Would probably point you towards Merger Arbitrage by Thomas Kirchner for a more technical reading. I know I'm someone that needs to get a little more interested in a topic before I dive into the nitty gritty, which is why I'd point you towards the podcast and Merger Masters book first.
https://www.accordingtosourcespodcast.com/podcast
Ok great! Thanks a bunch! Another question specifically about merger arb - would it be a prerequisite to come from M&A IBD or is that a big leg up? I know there can be a little bit of a diverse background for folks getting to into funds in general from people I’ve talked to but for that specifically is IBD the only way you think?
not a pre req - arbs are gonna come from various backgrounds just like the rest of the lot. While having an M&A background can certainly help get up to speed quicker wrt understanding deal mechanics, regulatory approvals, etc. you wouldn't necessarily be out of the running for an arb role if you don't have the M&A background
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