Hedge Fund Exit Opps

Hey everyone,

After a few years of banking (covered TMT) and some years at a smaller l/s fund, I am starting to realize that maybe I am in the wrong career path. I love reading about companies, am intellectually curious (maybe not as much as others in this industry), am in a good seat at a l/s fund that performs well. My role is mostly supporting the research process of a PM and senior analyst. I am not the best at idea generation but I do a decent job evaluating companies. Wondering if anyone is in the same spot where they are reflecting on potential next steps / has anyone left the industry due to a feeling of stagnation? What other choices are there for someone in my position?

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Comments (11)

Apr 9, 2020 - 1:11pm
Analyst 2 in HF - EquityHedge:

Wondering if anyone is in the same spot where they are reflecting on potential next steps / has anyone left the industry due to a feeling of stagnation? What other choices are there for someone in my position?

Yes, same boat as you. The idea generation process is not something I enjoy. I understand the principles of investing but don't get excited by the actual mechanics of the work. I personally find it repetitive after a while, and am stagnating in both learning and comp. The autonomy and intellectual freedom you get to study businesses is great, but I don't really find my knowledge compounding. Maybe i'm just doing it wrong, or haven't been sticking at it long enough for the compounding to be visible.

I'm looking for corp dev and strategy roles at tech companies. I would have to take a pay cut, but I'm making little enough (DCF. Right now I can clip the coupon at my current role for maybe another 5 years but don't see much runway beyond that, plus lots of vol. Labor market in our industry is heavily stacked against us in my view. Switching to something in tech would give more visibility on growth runway 5+ years out, plus optionality from getting to know the product side and hopping to new/interesting ventures that pop up. I just think that the intrinsic value of the skills I've developed (and can hope to develop) in this industry aren't compounding over time - actually, they are probably declining in value as more of the process aspects of the job get automated. Whereas a more versatile skill set from switching to tech will increase in intrinsic value.

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Apr 9, 2020 - 1:33pm

I think you describe many people in the industry. The good news it that you are still early in your career. When I was in bschool (a while ago at this point), I had a bunch of friends who were at HFs before school but realized that they didn't have a passion for, felt they were just OK at it, or just felt that they didn't want to spend the rest of their lives picking stocks. All of them were able to successfully transition out and are now highly successful in their current jobs. Last I checked, one went into the endowments/foundations world investing in HFs, others went to FAANG and other startups in business roles that were completely unrelated to what they were doing before, another went back into HF but on the business side as COO, another guy who was at a tech HF went to a VC/growth fund, another guy went back into banking, etc. I think most career paths are still open to you at this point -- it's just a matter of you picking what you want to do. But every year you wait, the more difficult it becomes.

  • Analyst 2 in HF - EquityHedge
Apr 9, 2020 - 2:21pm

Thoughts on business school without having a clear direction on what specifically you want to do? Generally not too keen on going to b school... I'd almost rather make less money and just find a place that would be stimulating enough to keep me interested

Apr 12, 2020 - 6:43pm

Hedge fund exit opps are different than private equity. In private equity, you spend a lot of time learning to manage a team, process and strategy to some degree. At hedge funds you become good at research and potentially developing a network, but it is more specialized of a skillset and so the opportunities afterward are more limited.

That said, I do know a good amount of hedge fund analysts who ended up joining a company in the finance/strategy/IR department of an industry that they followed. You just need to get to know the management teams pretty well and overtime you grow your network.

More on exit opportunities after the buyside here: Exit Opps at Hedge Funds vs. Private Equity

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May 3, 2020 - 1:52am

Can you describe the feeling of stagnation, what does that mean? I've had similar reservations about the industry where I feel my skill set is increasingly commoditized, if not already. I'm so replaceable it's worrisome.

In terms of finding what you like, I don't have a smart answer. It seems like trial and error and taking some risk is the way to go about it. You could take time off by doing an MBA and soul-searching. School will give you time to think, talk to people who are also searching for the next thing and evaluate different internships/work opportunities.

If you want to try something else and don't have an obvious passion, I'd suggest looking into things that you're good at. People usually enjoy what they're good at. Cal Newport writes about this topic.

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  • Analyst 2 in HF - EquityHedge
May 6, 2020 - 9:53pm

I guess the feeling of stagnation relates to the act that the job gets very repetitive after a while, I am somewhat less passionate about this stuff than the people I work with, and while admittedly I am fortunate to be in my position for now, I am looking for something that will be best for me long-term vs. short term monetary benefit.

Cal Newport is someone I will check out. Debating school... not that interested in the covid-19 world to do a remote MBA, however. I am actively talking to people in different fields, trying to rediscover what sparked me to get into finance in the first place by seeing whats out there.

  • Analyst 2 in HF - EquityHedge
May 6, 2020 - 9:49pm

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