Hi everyone. Its been a while since I did a Q&A. In the spirit of celebrating Easter, I'd love to answer all your questions on starting and running a hedge fund/family office.
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I'm in the military and working on the CFA...so nothing to add besides the standard path and lessons learned questions from me.
Are you interested in sharing background info?
CFA or no CFA? MBA? Your view on networking to a buy side gig? Thoughts on AUM threshold for starting your own shop? Comp and lifestyle at a Family Office vs. the HF you were at? Given that it seems like you started a HF...Is the FO your own or someone else's? Investment constraints (or lack thereof) inherent to the FO structure? What would you do different if you could go back and do it again? Biggest Pro and Con from jumping from a HF to an FO?
These are fairly hashed out in other threads, but given the background the initial post hints that you have, I want to prompt the advice stream to begin flowing.
Many of the answers to the prompts above are very conditional so feel free to pick and choose what to answer, or skip them altogether, as long as the wisdom flows!
Edit: I started reading through your other posts on the board. Great stuff.
All great questions, thank you
On the education side, CFA, MBA. You have to decide why you want to do it: A. To Learn - I'm not a fan of formal education. I don't think the education system is moving fast enough, versus the skills market demands. So I think you have to be self-taught or get good mentors. B. To get a brand next to your name - in that case, do the MBA. Its helpful. But be pretty sure what the pay off will be and how you want to use it and where.
In terms of networking - that's the only way to get a buy side job. Lots of coffees & meetings. Need atleast $100mm to start - though I know friends managing $6-10mm and it works. FO life style is generally lower key - easier. Given longer term capital. But goal is to make money. If you don't, lifestyle isn't there !
Investment constraints are generally lower at FO's - but this can actually be a problem. No constraints = more difficult, given larger universe.
In this case, any education is well worth it. All it comes down to is hustling and learning the industry?
Hiten
So I turned down an offer to go to a well respective family office ($1bn+) to stay in banking and recruit for hedge funds. Right now I haven't gotten as many looks as I wanted as I guess the markets are crappy. Thoughts on long term career path of starting at a well respective family office vs. a hedge fund if I want to eventually be a PM / have my own book in the future? I figured it's harder to move from family office to hedge funds...
I think that's fair, depends on the family office, who they were backed by, and what they invested in, and what your brand was. But generally true. Easiest path to your own book, is to go to a good HF, impress there for 5-7 years, and then spin off with your own assets.
Thanks for doing this! I have a few questions:
1) How much capital is needed to start a family office?
2) What's your background and how did you leverage your skillsets to transition from the HF?
3) How do you source potential opportunities and how much time do you spend on diligence for these investment opportunities?
You can start a FO with $10k ! Its just a name, just like a HF. Question what do you want it to do.
My background is mixed - Lehman Structured Credit, Goldman HF Sales, Goldman Family Office Sales --> Buy side
I spend 20-30% on the network, meeting people, getting ideas. 50-60% diligencing ideas, the rest on managing and monitoring.
Can you tell me about your networking process? Definitely interested in learning more. Any specifics would really help?
Thanks, WoW
Can you give a better overview as to how you get ideas? I've heard that many PMs at different funds, and friends who work within the same buyside space/strategy tend to bounce ideas off each other constantly, Sell-side trader reccs,etc.?
Idea sources are: 1. Following companies in industries you want to be involved in 2. Tracking old investments and how they are performing and new trends you are seeing in their competitors 3. Following good CEOs / CFOs as they move 4. Finding the best company in a industry you think is interesting here 5. The newspaper 6. Industry articles/ magazines 7. Other investors and conferences
What's your advice to those who are currently attending a non target school and trying to get into a bank, HF, and FO?
How could they standout and compete with the ivy-leagues?
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