AMA: Non-finance major --> BB IB --> Director at $5B+ Multi-strat HF (in 6 years)

roversam's picture
roversam - Certified Professional
Rank: Gorilla | banana points 570

It's been a slow week and I'm not going away for Christmas so AMA time.

Some background:
Engineering major at an engineering-focused school in the Midwest during the crisis (graduated 2011)
IBs only recruited for back and middle office positions
Got a gig in capital markets at BB bank in NY (2 years)
Moved internally to IB (2 years)
Recruited to portfolio team in an industry-focused HF as Analyst
Promoted to Senior Analyst and then Director

At this point I am responsible for coverage on a couple sub-sectors, help an MD with a few positions where we have significant exposure, and keep abreast of credit markets (where opportunities are currently limited)

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Comments (62)

Dec 22, 2017

Thanks for doing this. Did you come from a target/semi-target or non-target undergrad? Knowing this would make a whole lot of difference. If you came from a non-target, what did you do to differentiate yourself to break into a Hedge Fund. In other words, what made you stand out from the crowd?

Apr 2, 2018

It's a very good school - top 10 for engineering. IBs come there to hire people in tech, operations and risk. One-off banks (with alums) would hire people for front office roles so maybe we can call it semi-target

Dec 22, 2017

Can you describe your day to day currently plus overall lifestyle?
Also approximate comp range would be helpful

"Truth is like poetry. And most people fucking hate poetry."

Apr 2, 2018

I get in between 7:30am and 8:15am. We have a daily AM meeting at 8:15am where the whole portfolio team (analysts, senior analysts, directors, MDs, PMs) sits down and figures out whats interesting etc.

The day after that is a mix of:
Reading the news, Updating models, Talking to external research analysts/traders, Pitches/sit-downs with team members on specific ideas, Investor calls

I'm out of the office office 20-25 days a year for work: a mix of conferences, management team meetings, due diligence trips, investor meetings

Slow market days are boring because we need an active market to inspire us.
During earnings season you stay till 6-6:30pm, but out at 5pm otherwise.

I currently make between $400-$500 (but obviously super dependent on fund performance). The base is just $150

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Dec 22, 2017

What factors do you attribute to your success as an investor and how do you recommend an aspiring HF analyst prepare for a career in this industry? Thanks for the response.

"Truth is like poetry. And most people fucking hate poetry."

Best Response
Apr 2, 2018

Ha to call it a success would be a stretch. I would need to do well consistently (in terms of coming up with ideas) for at least 5 years before I start thinking in those terms.

We have hired kids directly from college (parents know senior mgmt or PM hired them from his alma mater), but I would advise working on the sellside in a front office role. Gives you a wider view of the world and you make boatloads of connections (my prior colleagues are now spread across the industry).

Another thing is to remember that NOTHING you learn in the industry is unimportant. Yes, IG loans is boring but you probably understand large company funding better than anyone. Yes, operations at WF in Charlotte or wherever sucks, but maybe you will be a bank investor one day. You really hate doing that telecom industry update because there are no deals, but 5 years later its a super hot field for whatever reason.

Don't be that a-hole who is so desperate to move up that she forgets that EVERY role has something of great value. My greatest value add on many days is tidbits of info I picked up doing something I didn't enjoy 5 years ago.

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Dec 22, 2017

Hey, thank you so much for doing this! I am in a similar position (non target West Coast govenment major with some experience but now NY middle office- client facing (it's a weird role and I can definitely PM you for anonymity)) but I was wondering what steps did you take to go from back to front office in your IB role internally?

Apr 2, 2018

I was never back office. Got hired directly into capital markets (which is different at different banks). I was in a great team for learning but bad for recruiting so moved to traditional IB to get that buyside gig.

Lots of people from middle office did get hired into capital markets and banking though:
1) Be willing to lose 1-2 years
2) Be willing to work in a "shitty" group
3) Harass people constantly... banks rarely fire people for that

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Dec 22, 2017

I also have a non-finance background - BSc- and was wondering if you could talk a little bit more about how you got into your first job in Capital Markets. What was your strategy to "sell" your engineering degree?
Thanks in advance for answering my question.

"Drill, Baby, Drill" - Sarah Palin

Apr 2, 2018

So, unclear if this helpful.

Basically I got a risk super day interview from the on-campus process. When I went up to NY, there was all sorts of commotion and they didn't have any slots so I ended up having lunch with an alum in the capital markets side of IB. At that point, I had literally 0 idea what that was.

I think he did ECM and he got me into a capital markets super day. I mainly remember saying I don't mind working long hours and love modeling.

Dec 22, 2017

What was your experience like recruiting for the hedge fund analyst role? How did you differentiate yourself as a candidate?

"Truth is like poetry. And most people fucking hate poetry."

Apr 2, 2018

It was a pretty traditional process from banking. I had 3-4 recruiters that I kept in touch with and they had my profile. Told them I was looking for roles with 3-5 years experience and was willing to do credit/equity or both.

I focused on bringing in a mix of credit (both corporate and asset-backed), and the more M&A/equity focused experience in banking. I was lucky to work at a large BB where I got a lot of breadth and worked across many groups.

I interviewed at a lot of shops (everything from traditional PE to long/short equity), including some that been my clients in capital markets. After a couple PE interviews, I decided I didn't want to deal with the focus it required. Overall, I lost a lot of time by not focusing early

I narrowed in on two kinds of roles:
1. Distressed Credit shops that are willing to be more hands-on (actually deal with the company in case their investment goes sideways and it becomes equity)
2. Multi-strat funds that were more industry focused but worked across the capital stack

I wish I had prepared for the distressed interviews a little bit more because I only made it past one of the phone screens. And even that interview didn't go well for whatever reason. I think this kind of fund was more focused on legal docs etc and I wanted something more market facing. Luckily I do work on a couple distressed situations now, and they're a lot of work (especially reading credit agreements, amendments, follow legal proceedings, etc.)

Did much better talking to multi-strat funds. I got interviews in funds that focused in the following industries: industrials, infrastructure, financials, tech. In hindsight, I think I enjoyed these processes more because there was a much greater variety in the kinds of people who worked in multi-strat (CLO traders, equity research analysts, bankers, etc).

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Dec 24, 2017

What general advice do you have for a freshmen (at a public school target Mich/Berkeley/UVA) who wants to work in the industry not only in a FO role but eventually work at a HF. Are there any things I could be doing now to improve my chances for an eventual exit to a HF without B-school (trying to limit my already sizable loan amount). I'm assuming landing such a gig right out of school would be very unlikely even from a target? Thanks!

Apr 2, 2018

I mean I'm sure it's possible to land such a gig, but the kids we hire from college are at a distinct disadvantage because their viewpoint is shaped solely by this one experience. So for your long term career, I would advise against it.

As to what you can do, of course everyone say networking and what not but I didn't even know I wanted to do finance until late in my junior year. I never interned in finance. What I did do was maintain a good GPA and that gets me interviews to this date

Dec 25, 2017

What is the most common route ("easiest" route) to an Analyst position at a multi-strat HF?

Apr 2, 2018

Have a rich dad

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Dec 25, 2017

Haha okay, thanks.

Conditional on that not being the case, what is the most common background you see in terms of previous employment?

Dec 26, 2017

hello I'm a Econ BA major at a non target university and I was wondering what type of internships should I be getting that is similar to hedge funds? I was also wondering what should one do to learn more about the industry?

Apr 2, 2018

I mean this is too broad a question for me to provide any valuable insight. So many different kinds of people can succeed at a HF. I don't know why people are so desperate to get in right out of college.

I just met an analyst recently, at a competing fund. I think he was like 40... SUPER SMART. He basically owned me during the conversation, but was nice about it. That was his first HF gig, he was in AM before that.

So like maybe just learn about whatever you're into and things will work out

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Dec 26, 2017

What is your view of the value in hiring quants into the fundamental space? With the rise of alternative data sources, it seems like more and more fundamental funds are at least looking at hiring quants to help with non-traditional data sets. Is that something that your team has considered?

I've heard that funds have been doing this but haven't seen too many job postings or anything on this.

Apr 2, 2018

Good question!

We have actually considered that... in fact given I'm the most CS-savvy person on the team, I have worked with a very good guy in our IT team to allow us to work with alternative data in the RE space (think beacon data or satellites)

Some industries (like retail, leisure, tech) have lots of alt data flowing and its literally impossible to trade those stocks without that data. My friends at other funds just get from third party providers and don't really do a lot of stuff on top of it.

I think that will change very soon... more alt data means less dependence on excel (UI-driven analysis) and more work on all sorts of regressions (and other analysis) running on top of this data. Of course lots of the old school fundamental guys are not big fans of this and so expect pushback

On job postings, think about it. If we decided to hire someone, more likely someone in-house steps up (me or the IT guy for example). Imagine some external quant hotshot comes in and then says "Oh my all your processes are so antiquated"... that's gonna result in her being fired in 6 months.

But should see more of these roles definitely. I know lots of friends (from when I was on the sellside) who did quant stuff and now they all have jobs on the buyside so clearly there are roles

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Dec 26, 2017

Makes sense, thanks! It honestly surprises me a bit that there's more willingness that there isn't more of an inclination for outside hiring. While some quants might be assholes about antiquated processes, I think it should be easy to find someone who has an understanding that technology isn't first and foremost at a fundamental shop. Interesting to hear this perspective though.

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Dec 29, 2017

2 Questions:

1) How much is HF recruiting affected by the tier of BB IB that I'm at? For ex. industry group at UBS vs. Goldman.

2) Do you recommend any textbooks, courses or books I can read to prepare for HF interviews?


Apr 2, 2018

1) Huge impact. Every interview I went to I had some guy from GS/MS there. Even people who I knew sucked got great interviews. I was at a very solid BB and always felt left behind. You can make it up by playing the recruiter game though - they are usually stupid recent grads from fluff schools that only read your resume to make sure you check the boxes. I literally could not tell you how stupid they are because it would take a whole day

2) Probably better to be aware of the news etc. I did go through the vault guide but never really helped. Doing like a case study a month on your own time can't hurt

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Jan 6, 2018

In regards to the BB tier comment, how do guys from elite boutiques (Lazard Evercore PWP etc) stack up in relation to BB tiers in the HF industry from your experience?

Jan 16, 2018

Where do you find hf case studies from? I haven't seem too many good ones online.

Dec 30, 2017

Hey mate, awesome thread so far and thanks for taking time over the Holidays to do this. What advice would yo give yourself if you were 18 again heading into Uni/College?


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Apr 2, 2018

Not sure about UK which is where it sounds like you are at.

But do the easiest classes, maintain a high GPA, get your dad to get you an internship in "asset management" and own ONE decent suit. Come across as humble but willing to work hard.

    • 1
Jan 2, 2018

You mention above that analysts coming from equity research are too trusting of "official data". Can you say a little more about what you mean and how those analysts overcome that bias?


Dec 26, 2017

Not OP but I'll bite on this one. I think what he means is that sell side equity research generally have somewhat standardized processes and ways of evaluating companies. Buyside, especially hedge funds, will generally try to take a more differentiated approach, which requires a willingness to look at both alternative data and alternative ways of interpreting data.

    • 1
Apr 2, 2018

Equity research is restricted by public/easy-to-source information. Often this means they switch off their brains and revert to whatever management has told them. This is the number one weakness of sellside analysts: too much trust in what the company says (via press releases, earnings calls, etc.)

Sometimes they are also too caught up in "modeling inputs" instead of just looking at the bigger picture.

I start every conversation assuming management is a lying POS (4 years in banking will do that to you) and go from there.

Jan 7, 2018

Hello! I was wondering if you could speak more to your experience in Capital Markets? Which specific division were you in? Did you find your experience valuable? Where did your colleagues who did not opt for a buy-side role exit into afterwards? Thank you!!

Apr 2, 2018

Since I was at one of the larger BBs, the capital markets side of the business had about 20 distinct teams. DCM was particularly hyper-specialized so there were lots of 10-15 person groups.

I was in one of these groups focusing on esoteric structured product origination. We worked with the power, financials and industrials IBD groups.

I thought capital markets was super cool (obviously biased) because we all sat on a large trading floor and I could learn from all the other groups. Since structured land is a little unique we had our own intense 100+ page decks and spent a lot of time with the CFO's team. Less so CEO.

The main downside was the recruiters only connected with people in IBD and basically thought everyone in capital markets was a DCM dimwit (which many were, but definitely not all). Not sure if I can blame them, they have so little time.

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Apr 2, 2018

Where did people end up?

Many like me made the move to traditional IBD. No one I know lost a year so they moved as third year analysts. Couple of the guys are still there and just made VP.

Lots of them ended at credit focused shops ranging from boring LO to true HFs.

Non-buyside, one or two moved to markets to like CLO trading. At least 4-5 people went to business school and now work in tech or generic corporate roles. Everyone seems to be employed and making decent $

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Jan 9, 2018

Hi roversam,
There's something about DCM that pick my interest but don't know why, I haven't started learning on the industry yet (also I am a non-finance degree), maybe because you my country is full in debt.

1, You as an engineer background, did you use some study material to get the basics at first or did you just learn by doing the job?

2, About keeping with the news, I was wondering where do you get it from (I mean do you watch mainstream media news like CNN, BBC, etc or is it better more professional journals like WSJ, The economist, FT) and what do you keep an eye for as relevant to the DCM industry.

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Jan 14, 2018

Appreciate you offering this question for you is did you pivot from cap markets to traditional banking to get better buyside looks or just because you wanted to? Did you think it would have been possible to get to the buyside straight from cap markets? Currently on a BB cap markets team myself looking to get into a HF and contemplating whether it's realistic to shoot for the buyside straight from my current role. Thanks in advance!

    • 1
Apr 2, 2018

Well I had to move because learning in capital markets stop very soon. I'm not kidding, the VP and I were doing basically the same work (only he got to travel a lot more). But I could have stayed on (as many people did) and just continued making $$. The main reason I moved to banking was so that I could jump to the buyside, and didn't want to take the jobs that were being offered to me by the recruiters.

It is definitely possible to move directly from Capital Markets to the buyside... depends on whether the recruiter considers you banking or DCM, because that makes a big difference.

Very hard to get traditional long/short from capital markets... basically have to move to banking. Lev Fin (and structured finance) people got into credit funds fairly easily. Some PE hiring as well ( project finance, infrastructure, distressed) from more esoteric groups

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Jan 15, 2018

Firstly, thank you for taking the time to do an AMA.

1) Resources you found helpful in developing your knowledge in finance/investing I.e Books, documentaries, website's (WSO ofc.)

2) What's your process of coming up with a trade idea/developing a thesis?

3) If you had your time again, would you consider going straight to a HF after college or doing your time in IB again?

Thanks again!

Remember, the grass is always greener on the otherside because it's fertilized with bullshit.

Apr 2, 2018

1) I actually read a lot of the popular finance books when I was in college. Just pulled up my Amazon: Liar's Poker, A Random Walk Down Wall Street, Fooled by Randomness, When Genius Failed (a personal fav. since back then I thought I was super smart), Smartest Guys in the Room, Barbarians at the Gate, The New Paradigm (by Soros), A bunch of books on the financial crisis, etc.

Not sure how much they helped, but definitely got me excited about finance

I didn't go to a target school so I wasn't familiar with the Vault guide or WSO or any other online resources. But I was just generally aware about the world

2) Too broad of a question. I basically try to follow any name I have looked at in the past and see what's going on with it. Also try to pick up peripheral names every few months or so to keep expanding my universe

3) No. I have great network because of IB. I SHOULD have moved earlier that's for sure given 2013-2015 were generally good years for the buyside (markets UP), but trying to look forward.

Also we pay the college hires way less (not sure if the case everywhere else)

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Jan 15, 2018

How are analysts from top EBs (PJT / EVR / LAZ, etc.) viewed compared to analysts from GS and MS when it comes to getting first rounds for traditional fundamental L/S equity funds?

Apr 2, 2018

Honestly I don't know

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Mar 9, 2018

I wouldn't group PJT in with EVR and LAZ given its smaller size and less robust brand name, but based on conversations with friends/alums from my school, I'd guess that analysts from EBs like EVR and LAZ are viewed as being on par with their counterparts from GS and MS.

Jan 16, 2018

Hey roversam,

Thanks for doing this. I joined a L/S hedgefund out of undergrad. I was wondering what the investment horizon of your fund's positions is.

Furthermore, I wanted to know how your fund measures your contributions when you were an analyst (including financial performance measures and more qualitative measures). What did it take to get promoted to senior analyst and director? How do they assess leadership potential at early stages? Seems super impressive that you managed to reach that position in two years.

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Apr 2, 2018

Nice. Congrats on getting that out of school. How long you been there? Do you feel like you're compensated fairly relative to hires from outside?

Huge range in time horizons. Literally some trades are less than 1 day and some have been traded around for about 5 years. The longer ones are often names we love, or positions we're stuck holding because its way too illiquid.

The way our firm works, there are four levels of analyst that work for the PM: analysts (recent grads / new hires), senior analysts, Directors (manage multiple positions), MD. I did NOT understand this completely when I signed the offer for an analyst role.

An MD is basically someone that has full control of a part of the book. The PM flexes the MD's book who then give Directors some autonomy and so on. Thus, The MD's performance has more specific line item level attribution, and below that it's more qualitative although of course people are watching your ideas.

Anyway a few months after being there, I spoke to a couple of the guys and expressed my displeasure at being only an analyst, since I wasn't a new grad and brought a lot of experience/maturity to the team. They pushed my case and helped me get promoted pretty quick

At that point, I dove in and tried to get as many names in the portfolio. It took a little while, but I listened to the kinds of ideas that the PM was into and then pitched them constantly. As I got more confident, the seniors got more comfortable with me and I gained more responsibility.

I think my breadth of knowledge and general comfort across multiple products made it easier for me

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Jan 16, 2018

Been there for about half a year. Not sure how much better an associate (after 2 years at GS/MS/etc) is at the job compared to me, but I am happy with what I am being paid, since all-in, it is higher than any IB job out of undergrad. Also the job itself is a target destination, with a lot of very qualified applicants, so I don't really have much room to complain, since there are other smart people who want the job.

How many positions are in your book, on average?

Jan 15, 2018

Would you mind giving some examples of single day trades?


Remember, the grass is always greener on the otherside because it's fertilized with bullshit.

Jan 17, 2018

Thanks for the great AMA, I'm at an l/s equity fund, and am always curious to hear about how things work at other funds. Can you talk more about what your research process looks like from start to finish? How long do you typically spend researching the idea? Is there anything particularly unique that your team does as part of the process?

Apr 2, 2018

We are a multi-strat shop so not restricted by asset type or time horizon. We do believe in some high-level themes though, a couple of examples below:

1) There is value in legacy structured product, because nobody wants to do the work
eg. a couple months ago a broker hit us up asking for a bid on a pre-crisis Synthetic CDO mezz tranche. The CDO referenced 4 CMBS tranches of differing seniority. And in each CMBS there were 7-8 loans. At this point I pulled together the basic data (CDO remits, CMBS remits, CMBS servicer reports from Trepp, list of all properties) and figured based on some simple math that we would never come close to the price talk that had been indicated. So, I just had an approximate price in mind and moved on... also learned a little bit about those 4 CMBS deals.

Probably have to look at 15-20 of these before you find one you like. But these are smaller $ tickets so not impossible to pull the trigger

2) Complex capital structures lead to opportunities
We can use CZR as a generic example (although obviously that was a HUGE deal and all of Wall Street was on top of that) of something that was a complete mess, lots of different seniorities/securities and asset sub-pockets. But essentially something like that (maybe smaller in size so not a lot of people are looking at it), hopefully with a lawsuit in there that scares away most investors. In these cases, if we see value the goal would be to become a major stakeholder in the clean-up process whether that's getting involved in the debt or equity.

Maybe something that ultimately results in a deal like GSO is doing here with Hovnanian (this has been in the news obviously):
These investments often involve positions in 4-5 different securities simultaneously, eat up a lot of time and resources and require a LOT of reading. But the upside is the ability to invest large sums ($100M+) and generate multi-year double-digit IRRs

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Jan 18, 2018

Viability of multi-strat, sector focused funds?

I haven't been able to wrap my mind around why that isn't more of a thing with HFs. Like let's take the Telecom sector - with the same fundamental analysis, one could decide to invest in ANY security along the capital structure.

Currently at a sector focused equity l/s fund, and practically every time I try and parlay my FI knowledge I get shut down in investment committee.

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Apr 2, 2018

Honestly there should be more, because as you note the fundamental analysis is already done so it's a matter of applying the same knowledge. At a minimum, your equity position can be influenced by following things like CDS spreads, debt covenants etc.

I think the issue is actually unrelated to the investing... it's a fundraising problem. Institutions want to be able to bucket things clearly and not provide PMs with huge leeway. Happy to be corrected, but I don't know if there is a ton of go-anywhere type money lying around. Easier to pitch a beta-neutral l/s or distressed debt or wtv

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Jan 18, 2018

Ah the fundraising angle is not something I thought of! Thank you for the informed answer. Threads like this redeem WSO.

That sentiments makes permanent capital/family offices more attractive...

Jan 20, 2018

Would you put your own money into the firm's fund or could you manage a PA based on your own ideas?

Apr 2, 2018

They don't allow personal money in the funds unless you're a PM

PA is completely locked down. Only ETFs, Mutual Funds and CEFs