Getting to a good SM from SS ER?

So I'm thinking a bit ahead here but humour me. Right now, if I convert my SA this summer, I will end up in FT SS ER (MS/JPM). If I aspire to work in a decent L/S SM HF one day, will I need to lateral into IB first or is it actually possible from ER? 

Also, is it possible to go ER -> MM -> SM? I know MM and SM investment styles tend to be different, so I'm steering towards no.

Thanks

Edit: I'm in UK if that matters.

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Comments (16)

Apr 2, 2021 - 11:36am

Don't go thru MM if your goal is SM. Blindly wanting to go to Tiger Club / activist fund, without assessing fit, is a foolish decision, so you don't need to go through IB/PE to peacock for a spot at a Viking Global. 

Know in depth the difference between various types of funds (SM, MM, long only) by talking to people in the industry - green is always greener. Some prioritize pay / upside, some (like myself) prioritize philosophy alignment. It's about what you care about the most. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

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Apr 2, 2021 - 11:43am

Added an edit to say I'm in UK and afaik Tiger Cubs tend to operate out of the US. That's why I just said "decent SM" (for now)

I spent some time in HFoF, so I understand somewhat how different philosophies can go. Regardless, you are right and talking to some people would be a good idea. Thanks.

Apr 2, 2021 - 11:53am

The comment above is so important. I would also suggest that you try to work under as strong an analyst as possible. Brand name in ER does not matter as much as quality of analysis. If you work under a very well-respected analyst, a lot of doors will open for you. 

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Apr 2, 2021 - 3:04pm

Disagree with above. It's easier to go to SM L/S from MM buyside than from ER sellside.

Both  are harder than IB/IB + PE

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Apr 3, 2021 - 10:02am

I'll add a slightly different perspective from someone based in London as the market seems to me to be quite different from the US, and it's people's experience of the US that seems to be what informs most of the advice given on here. In London I don't think you will have any problems moving to a HF from SS ER, and for some types of fund it'll probably be easier to do so from ER rather than IB as there's much more overlap between the ER skillset and what HFs are looking for.

Look at the background of partners / senior analysts at some of the better HFs in London - I'm thinking places like AKO, Egerton, Lansdowne, Capeview, Kuvari etc that are closest in style to how a US 'Tiger Cub' operates (high AUM $ / investment professional; generalist or very broad sector coverage model; fundamental equity L/S and long-only strategies; longer holding period than a MM platform). You won't even need to do too much Linkedin stalking on this as at least AKO / Egerton / Lansdown have all this on their websites.

You'll see that the vast majority of people started out in SS ER and moved directly to HFs from there, or went via long-only asset managers (many of whom will also run some L/S strategies that you'd be exposed to as an analyst). It's most obvious with the network of ex Cazenove ER analysts that are all over the London HF market, but there are plenty of other examples. 

If you're interested in funds with more of an activist / event-driven angle - e.g. TCI or Cevian - then yes, you'll probably find they have more of a preference for people with an IBD background. But that is definitely not true for your 'vanilla' equity l/s fund in London. 

The key things to focus on in your 2-3 years in SS ER before you try to make the jump across (2-3 years or 10+ years seem to be the sweet spots to make the move) would be:

1) Getting some exposure to thoughtful HF clients so you get used to pitching and defending an investment thesis.

2) Trying to get some stock coverage of your own - in London this is very achievable in your first 2-3 years, unlike the US.

3) Being able to quickly and accurately put together a 3 statement model, as you'll inevitably have to do this for case study interviews. I'm always shocked at the number of candidates I interview with 2-3 years of experience who can't do this, I expect because all they've done is update their senior analyst's existing models rather than build anything from scratch.

4) Understand what makes 'value-add' research that will drive a differentiated investment thesis and give you an 'edge'. "I've spent more time on my model than anyone else and forecast the quarter in way more detail" is not value-add research.

5) When you start interviewing, being able to pitch a stock that is outside of the sector you cover. If you're applying for a generalist position and can't do this, you'll get dinged instantly.

All of these things (which are pretty crucial to be able to do to get a decent HF seat) will be much easier to do in a SS ER role than an IBD role, with the possible exception of number 3.

Apr 3, 2021 - 6:17pm

Brilliant write up! Thank you so much.

Yes, I was trying to remember the London based L/S from my time in HFoF but I could only come up with Egerton, had forgotten other names but you've reminded me! I did notice what you said at Egerton (as well as a surprising number of ex-AlphaSights people). I'll do some research on the rest.

I will bookmark this and use this for moving forward!

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