No BB FT Offer to Buyside Research Associate

Hi everyone.

I just wanted to thank you all for the help I've received by looking on this board for the past few years. I originally thought I was set for a career in S&T, but when I received no FT offer after this summer I was really discouraged and thought the situation was hopeless. Nevertheless I networked as much as possible and was able to go through several intense rounds at a major buy side shop to become a Research Associate there.

It's really my dream job and I am in debt to everyone here who has posted along the way. If anyone has any interest about entry-level in AM/mutual funds or making the jump straight from undergrad and the interview process, please don't hesitate to send a PM.

Thanks again guys!

How I landed my dream job:

OCR

So number one the firm recruited at my school, so this obviously helped. I know that the big fund families only recently started pulling new hires out of undergrad, so this won't apply for everyone. I am at a semi-target with an excellent alumni network.

Networking and Interviews

At the info session I networked heavily for the group I wanted to go into and really showed my interest and knowledge in the area to the senior analyst who was there. I played the game, sent the thank yous, all of that. I was lucky enough to receive a first-round interview, and would you know it, the same guy I spoke to was the interviewer. He absolutely grilled me on my internship experience and a 30 min discussion about a specific industry (think financials/autos) including what drives it, what the recent news has been, and what my outlook was for the firms in the industry. The entire time I focused on how I had to really hustle and network to get where I am, and he really appreciated that. I also showed my passion for investing by talking about my PA, my views on the market, and being really energetic.

"I would kill for this job"

I was invited in for the final round in the company office and was told that I would have 5 interviews followed by a 45 minute presentation on a stock they would give me one week beforehand. All of the interviews were with analysts and had a few stock pitches, some market questions, a lot about my story/fit, and then a lot of industry analysis. Again, I focused on my energy and on my passion for investing. I didn't get all of the questions right, but I emphasized that I would kill for this job and it showed.

My stock pitch presentation

For the pitch I could use anything to research and support my thesis. I've never worked as hard on anything in my life and created a 4 page report and a PowerPoint on my company. I did several valuation methods, read through all of the conference calls on earnings, and visited a few stores. Ultimately they weren't looking for a perfect analysis, but they wanted to see that I knew my stuff and put a lot of work in. I gave my presentation to all of my interviewers (including the head of research) and just talked about what I knew. I felt awesome about it and then got the call about 10 days later and immediately accepted. If anyone has any other questions about my process or anything I can help with then don't hesitate.

2017 Update:

6ish years later and am now at a HF. Just wanted to give a shout out to the new HF guide and say that I highly recommend it if you are looking to prep for interviews as well as have a firm understanding of the industry. Check it out here: WSO Hedge Fund Prep Pack

Mod Note (Andy) Throwback Thursday - this was originally posted Nov 2011

 

I'm sure everyone in the AM forum would love to hear how you broke in straight out of undergrad. Congrats on pulling the job, that's really impressive!

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

Sure D M. So number one the firm recruited at my school, so this obviously helped. I know that the big fund families only recently started pulling new hires out of undergrad, so this won't apply for everyone. I am at a semi-target with an excellent alumni network.

At the info session I networked heavily for the group I wanted to go into and really showed my interest and knowledge in the area to the senior analyst who was there. I played the game, sent the thank yous, all of that. I was lucky enough to receive a first-round interview, and would you know it, the same guy I spoke to was the interviewer. He absolutely grilled me on my internship experience and a 30 min discussion about a specific industry (think financials/autos) including what drives it, what the recent news has been, and what my outlook was for the firms in the industry. The entire time I focused on how I had to really hustle and network to get where I am, and he really appreciated that. I also showed my passion for investing by talking about my PA, my views on the market, and being really energetic.

I was invited in for the final round in the company office and was told that I would have 5 interviews followed by a 45 minute presentation on a stock they would give me one week beforehand. All of the interviews were with analysts and had a few stock pitches, some market questions, a lot about my story/fit, and then a lot of industry analysis. Again, I focused on my energy and on my passion for investing. I didn't get all of the questions right, but I emphasized that I would kill for this job and it showed.

For the pitch I could use anything to research and support my thesis. I've never worked as hard on anything in my life and created a 4 page report and a PowerPoint on my company. I did several valuation methods, read through all of the conference calls on earnings, and visited a few stores. Ultimately they weren't looking for a perfect analysis, but they wanted to see that I knew my stuff and put a lot of work in. I gave my presentation to all of my interviewers (including the head of research) and just talked about what I knew. I felt awesome about it and then got the call about 10 days later and immediately accepted. If anyone has any other questions about my process or anything I can help with then don't hesitate.

 

Also interested in this transition process. How long were you in AM before the jump? How was the experience viewed? I imagine it was a similar style fit, but curious to hear more about the differences, how you felt like your AM experience prepared you (and where it may not have), etc. Thanks!

Array
 
Best Response

Sure, I can shed a little light on the switch. Trying to move from AM to HF is a double edged sword. On one hand, you have direct investment experience coming from AM, which is very valuable and banking obviously does not provide. On the other hand, the training programs are less structured, so there is a wider variation in the quality of modeling training you’ll get. This is why banking analysts are so valued in the HF recruiting process, because there is a more narrow range of outcomes in how good they will be. Once on the job, I found my MF experience to be much more valuable than any guy from banking since I had been investing for way longer and developed a much more refined investment philosophy by that time.

My own recruitment process was a combination of going through headhunters and networking. Headhunters will sometimes be less open to the background, so you need to make sure to do well in the interviews you get so that they back you going forward. Some will just not give you looks as a lot of jobs just want a banking analyst or a 2+2 guy. Once you’re in the door, there isn’t really a disadvantage coming from AM (at least top places), provided that you have strong modeling skills.

In terms of day to day, the key differences have been as follows:

  1. Way more focus on urgency and working as efficiently as possible. Many AM shops have guys covering 25-40 companies and knowing everything they can about them (whether they love or hate them), following every quarter’s results, and often owning many of them at all times. You will do a lot of work that adds zero value (because it leads to just not buying the name). At a HF, you likely have a handful of meaningful positions at once. You will dig in super deep on those names, but for ones you find less interesting, you won’t do much work on. For this reason, knowing what work to do, when to keep pressing, and when to put pencils down is a hugely important skill at HFs. In addition, if you hate something, you can obviously go short. Overall, HFs are much more focused on hard catalysts (as they should be).
  2. Everyone here are very commercial thinkers. You need to think outside of the box on to earn risk-adjusted attractive returns every day. Particularly at my deep value fund across the cap structure, we have very few restrictions on the type of capital we can provide, etc. At a mutual fund, you’re constantly just trying to balance a “model portfolio” so to speak within your sector. You can’t really step out of the fairway much. This is in large part due to how each fund type is paid. MFs are asset gatherers and get no performance fees, so they are incentivized to hug a benchmark in large part just to avoid outflows. At a HF, there is way more incentive to make outsized bets because your performance fee can drive so much of bonus in any given year.
  3. While we still have access to management, it is way less than at a large mutual fund. I used to speak quarterly 1x1 with many of the CFOs of my companies. Now, we’ll still get meetings and have calls like that on big positions, but it is much less frequent. Having this management access is in my opinion a large competitive advantage for mutual funds (offset by their need to own many names no matter what their sector view)
  4. There is way more emphasis here on speaking to other investors to get smart quickly on situations. This is probably because of the time urgency and needing cover a way larger universe per analyst. In addition, even large hedge funds are less concerned with giving away information to peers because of how much smaller in size they are compared to the large mutual fund families.
  5. Stating the obvious, but the analyst pool skews a lot younger at MFs I have found on average since you’ll make PM by 35-40 or so if you are very good and a spot opens up. At HFs, you have way more career analysts as there’s often one main PM and maybe 1-2 others.
  6. Overall, I am super happy with the switch I made. There is more “pressure” in this environment, but I like the sense of urgency and got pretty bored pretty quickly at my MF.
 

Hey thanks for doing this. 1. How big is your fund? How did the targeted size of the fund play into your consideration when you were making the switch? 2. You guys mentioned you are deep value, so would this be a long only HF or do you short? I imagine you have much more experience on the long side, so I was wondering how you dealt with the change (if you now short). 3. What was the average time horizon of your investments at your old AM vs your HF now? How did you deal with this shift? 4. Are you guys feeling the pressure from funds flowing from active to passive? Does the higher career risk bother you?

 

1) I won’t go into much detail on the fund other than to say it is in the $10-30 Bn range. I think the way to think about it in general is that the larger the fund, the more bureaucracy / red tape there can be with putting on positions, and the tougher it can be to advance. At smaller funds, it is more of a one team one dream mindset and you get more responsibility in general (though there are of course exceptions to both sides). I think both can be attractive depending on overall upside/downside, but there is a wider range of outcomes (both ways) at smaller funds.

2) We do have alpha shorts, typically when we think some change in industry trends isn’t priced in. It can take some time to adjust to shorting, but it isn’t a huge part of what we do, and it is difficult for everyone, so you just have to work at it and focus on hard catalysts.

3) In general the MF side was probably ~2-3 years and HF is ~1-2. Having said that, my fund has a good chunk of positions that have been in the book for well beyond that (either if they are still attractive IRR opps or positions that went wrong).

4) I think the industry is feeling pressure to move to passive on the margin, but institutional investors understand that you can’t just buy an index fund or ETF for distressed, so it is less impactful for our business. Fundraising is more driven by developing a track record of strong returns.

In terms of higher career risk, I am still young enough that I’m most focused on developing a strong skill set that can generate excess returns. Mitigating “career risk” is about developing that skill set that other people are willing to pay you for. I think you learn that by being challenged and doing more interesting work. In general, HF work is a lot more challenging and interesting, and I’m pushed to learn more here.

 

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