Funds that best position you to run your own shop?

The dream for many people on this forum (those who are actually passionate in investing), is to run their own shop. I've spoken to lots of people in this business, all of whom have mentioned 1. how much of a difference it makes if your boss is not a dick / yet is truly an incredible investor, 2. the importance of a small investment team where you can make an actual impact / yet fund has meaningful AUM. Granted you have potential and know what you're doing, and the fund performs, these 2 factors can maximize your career earnings by the time you're ready to launch. It's uncommon, but the narrative/goal is to make enough money (there was a thread on the HF forum about this, I think consensus was $15-20m) after working for 10-15 years at some fund, and then start off on your own. I personally think that the best funds for this (MM funds aside, and specifically focusing on L/S or event driven SMs) are obviously Tiger, Lone Pine, Viking, Pershing, but also think Soroban, Darsana, Altimeter, Dragoneer, D1, and Appaloosa. What are some other funds you guys think fit the bill?

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Comments (19)

Nov 20, 2021 - 12:55pm

It's going to be a long list, but it's all about lineage. You can extrapolate based on sizable recent year launches and where the founders came from. 

So yeah, the following profiles just help a lot in starting a conversation:

  • Top performers at MMs: Citadel, MLP, BAM. I can think of: Candlestick, ExodusPoint, Melvin, etc.
  • Tiger Cubs / Grand Cubs: no further elaboration needed, so D1 (Dan Sundheim), Fernbridge (Brennan Diaz), Voyager (Grant Wonders), Falcon Edge (John Griffin protege), etc.
  • High profile SMs: Pershing, Third Point, Appaloosa, Duquesne, Moore, Darsana (lineage is Eton Park), Soroban, Eminence, Whale Rock, etc.
    • Greenlight (kidding, sike)
  • Event: Farallon, Davidson Kempner, York (shut down but still lineage), etc.

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  • Intern in IB-M&A
Nov 20, 2021 - 2:51pm

Any info on Appaloosa and Soroban? Does Appaloosa even recruit anymore, and how are returns? Both are >1bn per IP, so comp is probably elite tiger cub level, and both are obviously incredibly reputable shops

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  • PM in HF - Other
Nov 23, 2021 - 10:46pm

Confused why you put MMs aside. They are by far the best place if this your goal at the end you just need to be with a PM you trust/like.

MM model is made to do this basically. But being an analyst and PM is different skills. Which is why many never make the leap. Then being a PM who runs the whole show (most sr PMs at MM are the same) whole nother skill.

  • Associate 1 in PE - Other
Nov 24, 2021 - 4:56pm

Curious, could you elaborate on why MMs are a better environment to eventually run your own firm? As opposed to SMs who may be more thematic, have longer holdings, and are less focused on quarterly results?

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  • PM in HF - Other
Nov 24, 2021 - 6:20pm

Based on calls I seen lately, MMs are basically raising cash out the wazoo with no real effort. Their model is proven now and they seem to be long capital big time not a shock for state of the world.

So basically all of them are looking to keep growing and only way to keep growing is to find more mid-size PMs or promote within somewhat. Then new PMs are basically getting access to more capital if they perform much easier as well.

So you dont need to raise funds someone does it for you. As for your question around environment all the stuff you mentioned is exactly why at a MM the whole team feels the heat vs just the PM, the PM is going to share that stress around. 

Now the SMs their setup is to actually keep certain people as analysts like forever. Cause its a different skillset and a good analyst is worth way more than a crappy jr pm. So you never see the actual full skillset the PM has, add to it they dont have metrics to chase quarterly you may never fully understand their process or pressure. They may never bring in new capital to let your ideas grow etc..

MM model is basically way faster to PM now and ultimately if good enuff to spin out. Issue is much less patience. 

  • Associate 1 in PE - LBOs
Nov 25, 2021 - 1:05am

Not the OP, but I think I speak for a "handful" of folks. I'm at a point where MMs aren't attractive to me -- I'm in MF PE, and I plan on (more like hope to if I even can) exiting to a top SM shop. To most MFPE guys, a MM HF gig seems like a bit of a downgrade, and the skillset/strategy doesn't really resonate with us the same way that top SM l/s shops do. 

I agree it's a great way to eventually start your own shop, but for me, it just seems a bit out of the picture. Would/could much rather see myself at a big tiger cub and then spinning out, otherwise I will probably just grind it out in PE

  • PM in HF - Other
Nov 25, 2021 - 4:07pm

Think this is a great perspective and why sometimes being an analyst for longer period works just as fine and possibly comp wont be hugely different. As mentioned the MMs prolly will lose their lustre as they have decided to just keep growing.

The other examples viking etc again lean more MM I would say. Elliot same.

  • Associate 3 in PE - Other
Nov 24, 2021 - 7:32pm

Elliott is a decent place to launch your own fund since good path to making "portfolio manager".  I've been pitched for three funds launched out of Elliott at ~ 500m - 1.5bn or so each in the last three days.  Same as Viking.       

Formula is ->  S/M manager styled firms that have a clear path to PM, good brand name, and that have the scale to grow.  I'd think that a strategy like Holocene will produce a few fund spinouts as well.   

Nov 25, 2021 - 3:39am

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