Advice on HF Recruiting

floppity's picture
floppity - Certified Professional
Rank: Gorilla | banana points 709

I figured that I'd give back/pay it forward in one form or another after being in the industry for a while. Frankly, the most relevant thing I could think of was advice on people searching for new opportunities. My advice is more tailored towards fundamental investing hedge fund recruiting as that's where most of my experience lies.

The competition for hedge funds is surprisingly strong and weak at the same time. The disparity between how well candidates are prepared is frankly astounding. This is not only in level/quality of experience but how well candidates know how to communicate their message or pique someone's interest. Here's a list of ideas on how to stand out / what not to do below.

1. Your network

Your best application is sent via a referral. Use and abuse your network. Not only do referrals have a much higher chance of getting you an interview, your resume is likely landing in more relevant shops as well.

2. Include a pitch

If your background isn't top tier, I'd strongly recommend sending a pitch with your resume. This pitch should be extremely well thought out and should demonstrate peak ability. Pitches do not need to be long, but excellent pitches that would pique my interest demonstrate ability to understand a business (beyond what IR tells you), ability to model, and ability to conduct primary research. It frankly doesn't matter exactly what you pitch as most interviewers, including myself, likely don't get real leverage from work done outside the firm except a "this could be interesting." What matters the most is demonstrating ability, and frankly, this isn't always a good investment pick unfortunately. A good pitch isn't the same as a good investment. I've chosen to interview people with less than ideal backgrounds because of a pitch attached.

3. Due dilligence

Before you interview, do your due diligence on the founder or PM of the fund and tailor your answers to what would be acceptable to someone with researched philosophy. While I wouldn't overdo it, I would for example, not try to explain why my quarterly modeling led to unique insight to a long term investor. If there's a real difference in philosophy, don't apply.

4. Stock pitches

If you haven't done it yet, always have 1 - 2 solid stock pitches ready. Part of my interviewing process is picking at holes in a pitch. If you have enough experience in the industry, you can usually spot them quickly. It's also ok not always know all the answers and admit weakness. "I don't know" is a better answer than making something up 99% of the time.

5. Process vs results

On your resume, you should demonstrate results in process and not result for results sake. It's actually a negative for most people to say they beat the market by X%, especially if they're more junior. Writing "interviewed 20 primary contact sourced organically, leading to investment" reads much better than "stock pitch went up 50% versus industry being up 10%".

6. Interview questions

Try to not answer too quickly and really think about why the interviewer is asking you the question before answering.

7. Tailor your resume

I would have multiple versions of your resume ready based on different opportunities

8. Career trajectory

Before you apply, think about career trajectory. If you are a financials analyst applying to a financials focused fund, chances of you being able to lateral to anything but yet another financials fund are slim. At some point you will likely have to specialize, but I personally recommend figuring out the direction yourself than it being chosen for you.

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Comments (11)

Feb 21, 2019

SB'ed for great comments / suggestions! @AndyLouis can we frontpage this thing?

Feb 26, 2019

thanks for the heads up

WSO's COO (Chief Operating Orangutan) | My Linkedin

Feb 21, 2019

Would this also be applicable for an internship? Wasn't sure if it would be worthwhile to send out a pitch with my resume.

Feb 21, 2019

thoughts on macro traders (govt interest rates, commodities and FX)??

just google it...you're welcome

    • 1
Feb 21, 2019

great post!

Feb 22, 2019

Excellent stuff, sent u a private message :)

Mar 1, 2019

Hi floppity, thank you for the post and sharing the insights. a quick query I am looking for HF with Life Sciences and healthcare focus. Is there a networking group in the NYC metro area for the same? Thanks, Andy

Mar 2, 2019

Thanks for doing this. For context, as I am beginning HF recruiting (for events-driven / activist HFs in particular) after doing PE for two years, I have very little experience in public investing and don't always have public stock ideas in mind (as my day-to-day involves working on private investment ideas instead).

A question I have is - do interviewers typically ask for a stock pitch on the spot at the first interview (is that something I need to be prepared for)? Or is that otherwise a take-home assignment that is given to you after your first interview? Thanks again for the help!

Most Helpful
Mar 10, 2019

You should be prepared to give the "elevator pitch" as part of first or second round interviews. Will really just be giving a high level overview of your thesis / thoughts. Most of the time you are probably okay having one fully-fleshed out thesis, but I've had scenarios where I went through the first one and they asked for another idea. You can always caveat a secondary one with "One that I've been looking at lately, but am still doing some work on ..." or something like that.

At some point you will do a case study (typically take home w/ 1-2 weeks to complete). This can either be them giving you a ticker or it could be you coming in with your "best idea" at that time. You will typically get very little guidance on what to do, but you'll essentially be creating a shortened initiating coverage report you'd see from the sellside.

Understand that you obviously aren't focusing on public equities right now, but you can still use your day job to your advantage. If you've spent a lot of time working in a particular industry, leverage this knowledge and find some public comps that you can dig into. You'll already have a decent head start on some of your analysis and can probably piggy-back on some of your firms reasons for submitting a bid (or not) as to why a particular stock is a long / short.

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Mar 10, 2019

Great post, thanks for sharing!

Mar 15, 2019