Feeling lost due to lack of guidance/support as a junior analyst
Couple of weeks ago the 1st year passed since I joined this L/S equity hedge fund, c.a. $100m in assets with global mandate. We're based in Europe. I joined here upon graduation, with some prior experience in private equity/consulting.
Day 1, the PM I work with literally told me to find a stock that will double in value and to get to work. Couple of weeks later I pitch him a US mining company in a restructuring. He has some questions about the cost structure, I work on it, come back to him and he says that we'll pass on that, since this kind of situation (restructuring) is tough to have a competitive advantage in. Couple of weeks later I pitch him a retail stock. The feedback I get is that it's not a super-duper great equity story, but we can take a small stake for one of our aggressive funds. Couple of weeks later I recommended we close the position at a slight lose, as the thesis did not seem to play out as expected.
Around September last year I started pitching some short ideas among tech names and got green light for all of them (4), but I think that it was mostly due to my PM leaning towards being a permabear, so he was just happy to have some short exposure in the lofty priced tech names in the US. We made some money at the beginning, but after the V-shaped rebound in the US commenced at the beginning of the 2019, I did not manage to cover the positions quickly enough and most of the profit evaporated. After that happened, the PM was quite pissed and started to ask, practically daily, when will I find that stock that will double.
I pitched some some more names, most of which got rejected, others were liquidated after 2-3 months of not bringing in profit.
Recently, the PM invited me to a conference room, because 'we need to talk'. He told me he hopes I know that my track record has been less than stellar so far and that he is willing to try and 'rehabilitate' me, by giving me a sector to cover, so that when I focus on that sector I can get some expertise and maybe gain some competitive advantage. He told me to 'look for some good stocks in the consumer discretionary sector'.
This was like a month ago. What I was doing last month was basically doing Bloomberg screen, combing through all stocks tagged as consumer discretionary. I got a few names that I intend to pitch to him, when he's back from holidays.
Here's what bothers me. As I mentioned I do not have any prior experience in public markets. I know that being an analyst at a hedge fund requires to be a self-starter and so on. An I believe I am one. But nonetheless I feel pretty lost due to lack of any guidance and learning opportunity at my current shop. What I am afraid of is that after 1 or 2 more years of this kind of trial and error I will be stuck in the same place and will not be able to jump to some other shop due to little progress I made here.
Is the kind of situation I described typical for a junior analyst joining straight from the undergrad? Should I start looking for some other place where I'll get some guidance and mentorship? Or should I just self-educate and try not to get fired in the process.
Thanks.
That’s not how it’s supposed to work. At the very least, you should be getting detailed feedback on why the PM disagrees with you; and the PM should share some of the pain of the losses with you and lead you up. You should also have more focused coverage instructions and a recipe for a process. I’d either try to express this concern or leave. It’s a toxic situation
There should be a funneling process where names are screened at a superficial level for story with your PM and then filtered to a few names for deeper, time intensive research and ultimately capital deployment.
The PM should be experienced enough in whatever style he is ( permabear doesn’t count, many HF managers used this as a marketing strategy to differentiate from the long only guys and HNW love hearing phrases like “risk averse” ) to guide you and provide insightful feedback.
You’ve failed to mention the funds investment philosophy and any further clarification on that will help. With a lot of funds with high concentration of HNW LPs (I assume this because institutions rarely invest in a global mandate generalist fund from my experience)and wide mandate (global in your case)the likelihood of just falling into technical trading or a non-coherent investment process is quite high.
Is your portfolio manager a private banker with more of a sales role/asset allocation experience versus a purebred analyst/PM with a specific specialty in an investment style? My worries on if it was the prior is the fundamentals tend to be weaker and the PM himself may talk like an investor that could generate alpha but can’t walk like one.
I am still an intern at a US-based L/S equity but in my opinion this kind of things are actually quiet common in smaller/unstructured L/S shops... just posting this so when more kids see this post in the future they are aware. This is how 99% of the industry works.
This place sounds like a disaster, I would get out ASAP. I would run a mile as an investor if I knew that a PM was putting pressure on a junior analyst with no experience to find names that will double. Most legit shops don't hire guys with no prior training, hence the ideal path is you do your 2-year stint in IB and then move into a fund where it is assumed that you can do the basics. If I was in your position I would seek an entry level role in a bank where you can learn the basics and then look to move into a fund that has a clear mentor culture where you spend a few years doing grunt work for the PM's to learn the ropes before you get tasked with generating ideas.
I would request materials or write ups from you bosses prior ideas and you can get a sense for what kind of themes he’s looking for, what sort of items he spends most of his research time on and what kind of format or tone he wants for deliverables. All things that he should have told you when you two discussed process and expectations. If there is not process or expectations, the next questions is whether this PM even knows what he’s doing. If he’s a good investor and an incompetent manager, you may be able to salvage it by changing your approach to working with him. If he’s just some guy throwing shit against the wall and doesn’t actually have any business running money, I’d jump ship. Some people are good investors, but bad leaders. Is he taking out his own poor performance on you? Did you two discuss job expectations ahead of time? Maybe you could suggest a few months in more of a support role (updating models, earnings reviews, etc) to get a better understanding of his process before pivoting back to idea generation and origination. That said... if you did pitch youself as someone who would come in and generate investment ideas (which some would expect based on private equity experience) you are ultimately responsible for finding ideas that work.
As a junior analyst, if someone is asking to you to find a stock that will double in value is incredibly difficult. I would search for other options because this isn't normal. Guidance and mentorship will shape your financial future and honestly, I don't think where you are currently will provide that.
I think that you should adhere to your last sentence if you think that self-educating is viable from both a practical and a long-term perspective (i.e. it works short-term and long-term). If you think that your success relies primarily upon the relationships you establish, then this guy is going to take 5+ years to convince.
This sounds like a terrible situation ... a sub scale fund with a PM who has either no bandwidth or no ability to train you. Although you didn't explicitly say so, it also sounds like there are no experienced analysts on the team to teach you the job or the fund's process (if there is one). My advice is to immediately start looking for a seat at another fund. However, given that this is not going to happen overnight ... in the meantime .. you need to make the best of a bad situation. Your PM suggested you look at the consumer discretionary sector to become "an expert" and that this will lead to better idea generation. You need to filter it down further than that ... carve out a subsector of consumer discretionary (it's a massive universe) .. find a group of stocks all in the exact same industry (e.g Luxury Goods or Restaurants) and really get to know that industry. Focus on 10-15 names and sorting out the winners and losers. Choose an industry where there has been a ton of volatility recently ... increasing the likelihood that you find something with enough upside or downside to satisfy your PM's thirst for "doubles". You still probably will not come up with any doubles from this group .. but at least you will be putting yourself on the path to doing the job properly while you look for a role at a different fund. All of my new analysts start underneath a senior analyst. The senior analyst typically has a coverage universe of 40-50 names that they can efficiently sweat for a reasonable number of ideas each year. When they are ready to train a junior in our process, we put someone underneath them with 10-15 names to start. I would look for a either a situation like this ... OR ... a PM who has been an analyst, knows how to train an analyst AND has the bandwidth to do it.
Many thanks for all your feedback guys.
I gave this all a thought, and I think this situation is rather beyond salvage and that I should look for a position in a different fund.
The problem is that I come from a non-target school and I have no i-banking experience. I have good grades (equivalent of 2:1) and some solid internship experience but no brand names in the finance industry like GS, BX or so on my CV. I got the job at my current fund from a LinkedIn listing. Should I try reaching out to headhunters? Or try FT recruiting at some bank and then try to pivot back to a hedge fund from there?
Follow grnprk's advice and refine your coverage, develop a sector expertise and reach out to other fund's if you still want to stay in the industry. You're stuck in a catch 22 where you're not experienced enough or specialized in a sector to jump over to other funds as a standalone analyst, while fund's with clearly defined senior analyst and analyst structure will likely handpick candidates from IB/PE pool and train from scratch. I assume to go into this field out of undergrad would require an immense amount of passion for public market investing and this is when it will be really tested.
In summary, my recommendation is the same as grnprk's. Spend the time you have at this fund to refine your coverage universe, gain expertise and experience in the consumer discretionary space (or whichever space you think your edge is in) and come up with 3-4 solid pitches for your current fund and for prospective new funds. The whole process could take up to over a year with invaluable experience and knowledge to be gained along the way. Lastly, this is where the soft skills of managing office/management issues that no one really teaches you at school come in, aka, keeping it professional while planning your exit. Enjoy the ride but also look out for red flags when you look for your next opportunity.
This was exactly my experience when I moved over to HF with no background in public markets. I got no guidance or mentorship, and had to figure it out on my own. Not all funds are like this. I stuck with it because I had no choice but to make it work (I was mid-career already at that point and had a family to support).
I literally worked harder than I ever had in banking and taught myself what I thought I needed to learn to be a good investor from re-learning valuation, reading every book I could buy on investing, forensic accounting and other related topics, reading tons and tons of write-ups on VIC to understand how other people looked at ideas and did analysis, following investing blogs, reading investor letters that I could find on the internet, back-solving into other investors' 13F positions, and understanding how my fund's founder invested (for example, you aren't going to get very far pitching shitty turnarounds if your PM likes to invest in high quality compounders), etc.
In the end, every analyst needs to learn to invest on their own. If you are going to stick it out at your current fund, you should really use it an opportunity to figure out what works for you as an investor. I'd rather make a bunch of mistakes and get fired from a no-name fund than to land a job at a dream fund and screw up there when stakes are much higher. You can avoid many of the mistakes there by making them at your current fund.
My 2 cents.
i've got 2 stock ideas for you PINS NOK
Pinterest has a large audience (250 million) where 50% use the site for pre-shopping. However, buying something you see and like, directly off the pinterest platform, is not easy (at this moment). However, if they amazonify the site...better integrate the shopping cart, and make it easier (and more obvious) how to buy stuff you see and like, then then company revenue and profits will explode.
Nokia has been signing lots of 5G infrastructure buildout contracts, but the revenue has not hit the income statement yet...and so you still have an opportunity to get on board before revenue from 5G contracts hits over the next 1-3 years. The CEO said they win 2/3rds of contracts they bid on competing with ERIC.
both these stocks have the potential to more than double over the next couple years.
Great stock picks, especially Pinterest. I'd label Pinterest as a tier 2 social media company in addition to snapchat and twitter. The case for Pinterest is that unlike snap and twitter where your main purpose is to communicate with people, the main purpose of pinterest is to find cool stuff to buy and so you welcome advertisements, whereas ads just get in the way on snap & twitter.
PINS flying high after strong earnings and user growth...even while the S&P 500 is taking....but you heard the stock pick here 1st
No offense faceslappingcompilation but these names may take a while to double. The whole world and their grandma will be on 5g by the time these names double.
Look elsewhere along the 5g value chain for those looking into the trend.
NOK had better than expected revenue last quarter just reported and stock spiked 8% before some profit taking reduced that.
The whole point of value investing is getting a position before other people get on board, and so that requires patience. Timing is very hard..however NOK compensates by paying a nice dividend in the meantime. If a large player decides to take a position before you, then you'll miss the stock move...and there is no way to know when that will happen.
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