UMM PE vs. ~$2B SM
Lucky enough to have the choice between two offers: UMM PE firm (last fund ~$5B, well-regarded in the PE space) and a ~$2B SM (~10 investment professionals, been around for a decade or so). I know the first answer would be privates vs. publics, but given that I don't know what I don't know, would love to hear people's input / opinions on deciding between the two. Some pros and cons I've thought about below:
- PE:
- Pros: 2+2 path, b-school optionality, training / investor mindset development
- Cons: no real say on an investment, still basically an analyst, don't see myself on the partner path, hours?
- HF:
- Pros: real responsibility, will (hopefully) be learning from experienced ex-Tiger cub people, covers the sectors that I'm actually passionate about, potential for crossover investing, hours?
- Cons: blow up and get fired, intellectual rigor of the job, lack of formal training / investment development process
Any and all replies / suggestions / thoughts would be appreciated - especially for those that struggled with a similar decision or have strong opinions either way!
Take the seat where you enjoy the work and the people the most.
Can you PM?
How do you get both of these offers and you don’t know what to do? Wtf
How the fuck is “2+2 path” a pro? You people are hopeless.
You’ve got a pretty fair Pro/Con assessment of both opportunities. Hedge Fund is a high risk, high reward for less effort (hours) than Private Equity. PE is much more of a sure path to wealth with a higher floor in terms of downside, but it comes at the expense of quality of life.
Choice is yours. I’d go PE simply because the marginal value of the potential incremental dollars earned at the HF would not be worth the risk of everything blowing up. I’m biased though — I did PE for my career. I’m sure all the successful hedge fund managers will just as enthusiastically recommend the HF.
That AUM per head at HF is way more impressive than 5bn PE fund of which there are hundreds
Was in similar shoes and I chose PE because when thinking public investing I didn't really know if I have an 'edge' and could generate actual meaningful alpha. Yes, I could write an investment thesis of Nvidia/Microsoft (you choose the company ) but my viewpoint wouldn't be that differentiated from a typical sell side ER and after talking to successful PMs and hearing their anecdotes they seemed to have that 'it' factor that I just don't think I have. Perhaps you can build this investment acumen at a SM but I've come to realize vast majority of finance people sort of suck at mentoring/teaching
People like to complain about how menial the task is at the junior level (asso/VP) in PE and while I complain about it too, I think people tend to underestimate the amount of stress when an investment actually goes wrong. Yes there is stress in the hours and the stupid tasks but actual investment stress is zero at least until the VP level (can't chime in for Director +). On the other hand, at a HF except maybe for a 3-6 month 'warm-up' period you are marked every single day and will certainly get canned easily. I'm not sure if I can sleep/rest well daily with that level of stress.
Do I think I have 'it' to make it to become a partner in PE? Not sure but at least I can see myself successfully clipping checks and getting carry (though who knows if that will actually materialize) and make it to Director. If things don't pan out I can probably move to some corp. dev role/operator role whereas in HF/public markets, you're sort of stuck.
With that being said, when I'm redrafting my 60th page of an investment memo at midnight while seeing one of my college friend clearing over $1m in cash (SM HF) and leaving the office by 6-7pm everyday it does make me wonder haha
I work at a similar fund (~$2B SM, 10 IPs).
I never worked in PE/banking, but I think the best way to diligence this would be to try and call former employees of that SM. If its a truly good LT seat, there are probably 10 former investment professionals anyway (they should be willing to be references for this fund, if they aren't its a red flag). Ask them why they left and what are the pros and cons. Also could ask friends in the industry if they have thoughts/have heard things on the fund. Most multi-B SMs all know each other.
You already know what the PE seat is like, so just try and do primary research on what the HF seat will be like.
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