I've always intended on focusing my career around oil and gas. I'm currently in a transition phase (I graduated in December and am still interviewing, with an offer in hand). That said, a really cool HF role nearby popped on my radar recently, but it is focused on the financial sector.
My question is exactly what the thread title implies...does your focus as an analyst somewhat silo you into that sector? This fund focuses very heavily on financial sector and structured finance so the ability to transfer to an energy role within the fund is off the table.
To some extent, yes, but usually not insurmountably in my experience (especially at junior levels). Many people go from sector-specific roles on sell-side ER desks or banking groups to broader-silo/generalist-style funds. It's worth noting that both O&G and Financials are often considered to be on the "more specialized" end of the sector spectrum, though.
So going from Financials to Generalist wouldn't be too difficult, Generalist to O&G would be a little harder, and Financials to O&G the hardest?
To the extent that you can generalize about this sort of thing, yes.
yeah, resources and financials are the two places where people tend to be specialists.
Hey Kenny, any opinion for someone just starting in the investment game, should I look for a specialty early on? Currently working on some major healthcare projects for the hedge fund I work for which is interesting.
Namely, in your opinion for junior analysts should we shoot for a mile wide an inch deep or a mile deep an inch wide sort of thing
Thanks
I'll drop my two cents. I think there is a tremendous amount of value to being a specialist, especially if it's in a sector you find interesting. I come from the school of thought that says you have to know businesses inside and out to make informed investment decisions: you filter out noise better, you make decisions faster, and you understand dynamics more efficiently. That means if FASB comes out with new accounting changes regarding DAC for insurers, you'll be able to assess the impact on PRU, MET, etc. more quickly than the generalist who covers US housing, Latam petrochems, and European power companies, in addition to insurance. That may be an extreme example, but the point stands. Not only does it make you a better investor, there's some job security to knowing you are the only guy at the fund who knows how to model out profit oil in Kurdish PSCs for the major oil companies. If your PM wants to understand the impact of solvency II on Eurozone insurers, he's going straight to you. It's at that point that you're able to actually add value. The generalist, on the other hand, would likely have to spend hours googling the topic and copy-pasting some sell-side report. Just my opinion.
I can confirm this (a niche within financials ER). Can't personally speak to O&G, but the accounting can get pretty esoteric with some financials.
I would never recommend that an amateur investor randomly invest in a bank, insurer, or specialty finance company. Yes, sometimes you can follow an experienced investor in (like Berkowitz with AIG/BAC). But good luck picking an insurer/bank and understanding it, let alone modeling it.
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