Hate to regurgitate on this topic here, but as an industry outsider genuinely curious why MM HF > LO AM is regarded as virtually impossible vs moving from SM.
Is it mainly bc of the prestige / filtering factor?
Bc in the end isn't the day to day job more or less similar as an analyst if you're doing market neutral L/S equities?
| Best Public Markets Gig? ER, MM HF, SM HF, or LO AM? | 13 | 2d | ||
| +44 | How to start a family office (HF rainmaker) | 17 | 1d | |
| +34 | Law to Quant Pivot? | 10 | 2d | |
| +23 | Starting Personal Account | 12 | 12h | |
| +22 | Looking for a Fund Manager to partner with to start a new fund. | 17 | 2h | |
| +21 | People who work at hedge funds, what made you interested initially? | 13 | 1d | |
| +21 | How to destress at Pod HF? | 8 | 23h | |
| +19 | Hedge Fund WLB | 6 | 1d | |
| +19 | HF Final Round Interview | 4 | 5d | |
| +17 | Most appealing public credit seats out of RX? | 1 | 5d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Associate 3 in IB - Cov, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
More suggestions...
I hope those threads give you a bit more insight.
There is a perception that MM HF analysts focus all their time on "the direction of the numbers" and thus lack creativity or the ability to identify truly great investments where business model inflecting, etc. I think this is wrong but not a completely unwarranted POV if you've met enough MM folks. Also, pod model is high turnover and often valuation insensitive (not always) which doesn't work well if the goal is to maximize after-tax returns in a concentrated book.
Thanks for this, that makes things a lot clearer.
Can I ask why this setup came to be, is it driven simply from the business model of internal short-term competition at MMs that inevitably compel them to chase quarters? But I don't get how SMs dont have this pressure bc surely they get short-term heat from investors as well.
I'm really just curious in earnest and didn't get why I was getting monkey-shtted.
Because earnings revisions are the most significant driver of short-term alpha. You can isolate and lever this alpha with a market-neutral/factor-neutral risk model to deliver an uncorrelated stream of HSD-LDD returns. SM do have pressures to perform quarterly and it is why they are losing 90-100% of incremental market share to multi-manager platforms where gross is allocated ruthlessly in an up/out culture that removes complacency. Theoretically SMs should be able to take advantage of near-term volatility created by the pod-induced / passive market structure which is why medium / longer-term focus is valued by fund investors; however, in practice (my view) most end up delivering a return stream that looks like levered beta masquerading as market neutral. Basically they get lazy.
Short version is that on average, the skillset for MM (short term catalysts, perception is king) is incongruent with what’s required for a LO (long-term driven, fundamentals biggest key to story). SM likely has longer term holds vs MM (though highly variable and generally more focused on fundamentals so more natural fit with LO depending on strategy
All of the above makes sense but also because there are 200 pod analysts for 1 SM seat, so obv existing SMers will be more valued when competing against MMers
theres the famous big name SMs and then theres also 10000 subscale SMs
there are way more SM analysts than pod analysts because there are way more SM HFs than there are pods
Ullam quia corporis odit. Id rem aut eveniet nam.
Laudantium dolorem aliquam animi aliquid rem tenetur. Reprehenderit commodi voluptatem delectus nam ut inventore. Minima sunt placeat et facilis nulla blanditiis. Qui minus qui unde voluptatem nihil.
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...