Best banking groups for HF?
I know that certain groups tend to do particularly well for PE recruiting. Financial sponsors groups obviously but also M&A and levfin groups and the EBITDA-based coverage groups like industrials, consumer and healthcare.
But what about SM HFs? Are there certain groups/geographies that HFs prefer? I would think TMT coverage would be good given most funds' tech bias, so do SF Tech groups place well? What about FIG? M&A? RX?
I worked at two separate SM funds in New York so can provide data points from what I’ve seen.
The majority of people I worked with came from TMT or Consumer coverage groups. The ones who came from TMT often times did their undergrad in engineering as well. I personally covered TMT and studied economics, so I’m not sure if the undergrad major mattered that much but thought it was an interesting point to include.
As for geographies, every person I met at the associate/analyst level came from the east coast. We had two senior level people who came from London and one senior person who was from Toronto, but these people were very tenured and hired for their specific specialties rather than geography.
I can’t imagine someone from the west coast couldn’t at least get an initial interview with an east coast fund, I think it’s probably more just self selection that occurs. Most of the people I knew from the west coast were more interested in startup/tech company exit opps. Or if they did want a hedge fund they would go to one of the west coast funds.
shouldn't matter.
HF invest in such a wide variety of things. Depending on which hedge fund, prob makes sense to work in a group that deals with same investments the HF you want does
Can't go wrong with RX - I exited from there, and my fellow analysts left to join everything from distressed, credit l/s, equity l/s, mf / umm pe, to even growth equity and VC. Insofar as we all left only a year or two in, RX provided the best understanding of cash flow, cap structure, and waterfalls. Only downside is that there's very few good seats.
what rx shops do you consider good?
HLI, EVR, PJT, LAZ, MC, PWP are all pretty safe bets; other notable ones are Gugg, GHL, Ducera
Interested in learning more about the transition from RX to VC as they appear antithetic at first glance. What part of the skillset would you identify as transferable? Do you have examples of VC firms that hired RX bankers (i.e. are they smaller/specialized/esoteric shops)?
idk, though rx might not be as directly applicable as TMT, or another high growth industry which would lend itself to VC, you're ultimately still learning about how companies operate, how to model, so on so forth. I think the point is that while Rx might not be a feeder for VC (likely some self selection, as well), it would in no way eliminate you from being considered.
While being in RX is antithetical to VC, the expectation of a junior hire is more or less whether you can do the work and hold an opinion. A RX analyst has diverse modeling reps, understands cap structure / waterfalls / cash flows, and has exposure to sector agnostic M&A via going concern sales, distressed buyouts, etc. That being said, the expectation at growth shops is not that the junior hire is an expert in bankruptcy. Although you might have a higher threshold in explaining your story coming from RX, you would be as technically competent as any TMT guy and that makes you competitive candidate. When it comes to some of these idiosyncratic exits, I think just having a strong network means more than where exactly you're from. Also, I'm wary of naming specific shops, but the two I know of are sort of in the UMM size general firms (i.e. smaller than GA but of that variety)
How hard is to go from a place like PJT RSSG / Laz RX / HL RX to a Tiger Cub (assuming MF after IB)?
As someone who knows who would like to invest in equities in the long run but enjoys rx more than M&A/coverage, do you think taking one of those 3 shops is a good idea or GS TMT/GS M&A might be a better option?
What about fig?
^
interested
HF is such a broad asset class there is no 1 favorable / desired group. It really depends what type of investing you want to do long-term.
If you want to go to a distressed/special sits HF - do RX.
If you want to go into a macro HF - do S&T.
If you want to do Tech investing - do TMT.
Some groups (i.e. TMT, Consumer) open more doors in HF just given the size of those asset classes and trading optionality. For example, most equity HF will have some exposure to TMT or Consumer.
However, at the end of the day I would prioritize what you want to do long-term and try to align yourself in the best pod/group to get there. If you aren't sure, I would do a product group like M&A or LevFin as those give the most optionality
What about a credit hedge fund (preferably HY)? I'm assuming LevFin and DCM?
Yeah, those are good groups. From my understanding most credit HF focus on those groups for junior hires, however, the senior hires tend to be the more vertical focus (i.e. industry coverage). Most credit hedge funds will start juniors off as generalists and have them focus on a few sectors as associates and further focus on a specific sector(s) as they get tenure
For certain credit hedge funds, look at securitized products banking groups
Equity Research lol
I feel like aside from specialized groups like Rx (which I'm separating from M&A), most folks in banking who want to go into the HF space generally need to be in coverage given the majority of HF roles will be specific to a certain pod focus (from MM standpoint). So if you're a healthcare banker focusing on medtech then you've got a good shot of landing a medtech pod seat providing you're super dialed-in to the space. For folks in ECM or M&A it could be more difficult given often times you are working across industries but some shops will bucket you into specific coverage areas within your product group which you can leverage during interviews.
That being said, everyone I know who went to a HF from Banking (two people, everyone else I knew went to a HF from ER) was in a coverage group and knew their space cold.
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