Wanted to get some thoughts as to a transition from PE to HF.
I joined my current firm straight out of graduation. My vertical is the debt investment arm under a broader umbrella of a firm that also does traditional VC/PE. So think Sankaty Advisors and Bain Capital, Whitehorse Capital and HIG Capital, etc.)
There's some good information on a previous thread (https://www.wallstreetoasis.com/forums/pe-vs-hf-l…) but wanted to see if anyone had any other inputs. Also very interested in comparing lifestyles between the two. While I surely don't mind putting in hours over the weekends, I've come to resent having such an unpredictable working schedule. My thoughts is that your hours will typically be better in an HF given you are working around market hours (which are set) vs working around transaction timing (which are unpredictable).
Thanks in advance.
MM PE to HF- When to start interviewing? (Originally Posted: 03/14/2014)
Hey guys, I've been reading WSO for years but don't post much. My story is I did two years at a BB and am now in my first year at a generalist MM PE firm in NYC. I work with a great team and like the job more than banking because I'm learning a lot more about investing.
I spend a lot of my free time researching stocks and am active with my PA. I'm interested in transitioning to a HF after doing two years at my current firm. I like that the universe of companies HFs can invest in is much larger than the comparable PE universe. In PE, I see a lot of really great companies sold in auctions which ultimately get sold for EBITDA multiples greater than 10x, which my firm will never bid. Only the winner in an auction gets to participate in the equity.
On the other hand, with stocks, anyone can invest and participate in a company's run. Some people prefer PE investing because they like the aspect of control investing (in particular being able to control the company in a downturn and mitigate losses). The flipside is it can be harder to exit private companies in a downturn relative to common stocks. In addition, I find it discouraging to do a ton of due diligence work on a company in an auction process and ultimately lose out to another sponsor who bids slightly higher and wins. Sure my diligence can be used for other deals in the space. That said, I would rather do a lot of work and get to invest in a public company (the caveat there is making sure not to invest at too high of a share price). Nothing I'm saying here is really that insightful, they are just things I have come to realize as I have started working in PE.
My questions are below. I searched the board for responses and didn't see many. Apologies if they have already been answered somewhere else.
1) I'm interested in working at a L/S generalist HF which makes investments with the plan of being in the stock for several years. From people I've talked to, it sounds like such places have a slightly more relaxed culture because they don't worry too much about slight quarterly losses (should they occur) as opposed to more short-term oriented funds. Does anyone have any ideas of funds like this? I've heard The Baupost Group takes a pretty long-term view towards its investments and Bloomberg terminals are not everywhere in their offices. This is the type of place I'm looking for, similar to a library where most people are buried in 10-Ks and other documents researching stocks as opposed to being glued to the Bloomberg monitor checking on the price of a holding.
2) I'd like to start at a HF in summer 2015. When should I start interviewing? If my start date is a few months earlier or later, that's fine too. I know a lot of the big HFs just finished recruiting along with the megafunds. Perhaps I should have been in those processes, but for some reason I felt it was just too early to be recruiting and those processes tended to target banking analysts. I'm not set on finishing my two years at my current firm, but would like to ideally. I know a lot of HFs recruit just when they need to fill a position, so timing can be uncertain. When should I express interest to headhunters? I was thinking of doing so pretty soon.
3) With my own investing I spend most of my time researching long ideas. I don't have a lot of interest in shorting companies and to date have never done so, although I have bought puts before. I feel like I would probably get more interested in learning how to find good shorts when I get to a HF, but I would still want to spend most of my time working with long ideas. Are there certain people at HFs who spend more of their time finding long ideas as opposed to short ideas? I wanted to make sure I wasn't a poor fit for a HF and that I might be better off at a long-only fund.
Thanks for any responses you guys can provide. To offer something back, I'm happy to talk about my experience in MM PE. I work from 9:30am-7pm pretty much every night and have a good work-life balance. I'm still making good comp, though definitely not as high as the megafunds. My current firm is pretty flat, so even though I just started last summer, I'm able to take on a decent level of responsbility and have started to develop my qualitative/soft skills more (leading calls, speaking up in meetings, etc) while still developing my quantitative skills.