HF -> MF PE

BobbybananamA's picture
Rank: King Kong | 1,215

Just as some background, I did 2 years of banking then did 2 years at a elite hedge fund. I'm contemplating becoming an associate at a mega-fund PE firm, but I know this is an uncommon career choice. Would any of you consider leaving an elite hedge fund role to work at a mega-fund (like at Carlyle, KKR, Blackstone)? Why or why not? (I know "elite hedge fund" is fairly unclear here, but I mean more specifically the sort of HF role that pays in the Apollo range without the insane work hours.)

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Sep 10, 2019

It might be helpful if you shared why you are contemplating this move and your criteria for evaluating this decision, to get better responses.

Sep 10, 2019

contemplating for a few reasons

1) i am risk averse and have no idea if i will find a great hedge fund seat. i am keeping my options open
2) hedge funds are terrible at training junior people, but private equity funds are actually much more consistent here.
3) most important is that i have an interest in a specific industry vertical with VERY few seats both in PE or HF. at my HF i was the only analyst looking at this vertical and I had to figure out EVERYTHING on my own re that industry. modeling is easy to figure out on your own, but forming an opinion on 50 companies is very hard to do on your own. the role at this PE fund is the same vertical but they are VERY good at it and I think I'd learn a lot about the space by working there. this is the most important reason for me.

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Sep 10, 2019

So you're still at the HF?

Elite HF generally is Lone Pine, Viking, Tiger Global, maybe 1 or 2 others. Those are the best jobs on Wall Street, period. Way more promising than being the millionth associate at Apollo. So not sure why you want to leave.

In terms of industry expertise. It's not that difficult to develop on your own. The reality is that beyond your first 3-5 years in the investment business you start to run up against the people above you as a bit of a ceiling. The best jobs out there are incredibly lucrative and no one leaves, so the only way to get real economics is to be building out new white space. I would view it as an opportunity.

It's entirely possible that you're calling a random $3-5bn hedge fund an elite HF because they pay well, in which case my above advice need not apply. Those are generally pretty mediocre seats and if you can get to large cap PE, it's much better earnings potential especially on a risk-adjusted basis.

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Sep 10, 2019

they are pretty different jobs. If one isn't giving you fulfillment or you don't want to stay long-term, then it makes sense to switch to one that would. But it's pretty hard to do so, and pretty much off limits unless you have a ton of modeling heavy experience, so don't leave unless and until you get that offer.

Array

Sep 11, 2019

I work at one of the places you mentioned. TBH, good chance you won't get an interview much less a job. Completely different jobs.

Sep 11, 2019

Why? Aren't I more qualified? What would be their concern?

Sep 12, 2019

It isn't personal - more just a dynamic that the industry is hyper competitive, particularly at the top.

  1. It is a numbers game. Each of the 4 MFs take a handful of associates per year
  2. The associates are typically 3.8-4.0/top test scores from top targets, top banking groups. So it is a selective group (not saying you don't have the GPA/SAT scores/top banking experience - just saying it is competitive). Also not saying there aren't outliers, but trying to give you a picture of how recruiting is generally viewed
  3. This is a risk adverse business. You aren't going to fit the mold of 99% of the people who ultimately make hiring decisions - people hire other people who are similar to them. They'd also view you as a flight risk to go back to a HF if you start getting crushed by work
  4. You already made the decision out of banking to be a public markets investor... so why PE?
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Sep 11, 2019

how difficult is it to go from top MM to top SM?

Sep 11, 2019

usually not possible, but depends what you mean by top SM. lone pine will not look at your resume if it says Citadel.

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Sep 12, 2019

why will they not consider ppl coming over from Citadel? I realize the investment style is drastically different, but would they not be able to mold someone that is still mid to late 20's? What is the most common path to a top SM (Tiger, Viking, Lone Pine)?

Sep 11, 2019

Have you thought about business school? Do you think you'd get into H/S, and if so, is that an attractive option to you?

Sep 11, 2019

I think it's 50% chance i get into H/S, but including W it's more like 75% which is fair. I spent a month studying for the GMAT but then realized I wouldn't be able to grind out a 750 fast enough (realistically takes 3 months, not 1). As a result, I was forced to go pencils down and recruit. If i don't get a great job, I might just study for the GMAT in the evenings then apply to H/S/W. It's a little depressing if I have to spend my current life savings just to stay in the game, but maybe that's what it comes to.

I've only been recruiting for 2-3 weeks now, so maybe the outlook becomes rosier over time. It's honestly just so depressing though since, when I realistically estimate myself I was just so lucky to get my last gig to begin with. I don't know how common this outcome is, but I am concerned my career will "flame out."

Sep 12, 2019

I find that the tail is wagging the dog a bit here. The two most important questions that should drive your decision are: 1) what do you want to do in the long-term; and 2) what do you think you will be most successful at long-term?

If you pick a career that does not play to your natural strengths, then it won't matter if you worked at an elite HF or MF, because you will hit a natural ceiling and your career will flame out. These are two different jobs that require two very different skill sets to be successful in the long run.

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Sep 12, 2019

It's more an issue of I'm scared I will get unlucky in interviews and be forced to accept a shitty HF job. Idk if this is at all rational, but my dream has been to manage a large portfolio one day. I feel like the best way to do that is to kill it at a prestigious fund and so I don't want to go too far down the prestige ladder. The end date of my program is coming up soon at which point I am technically unemployed. I don't know if this makes sense but I'm concerned that more than a month after the official end date I will look worse to future employers, which could force me to accept a not-great HF offer. If I think that's a real possibility, then I'd rather spend two years at a mega-fund just so I can hop back to a role similar to what I had before. Maybe I am crazy for thinking this though, so feel free to talk sense into me if what I'm saying is overly risk-averse.

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Sep 13, 2019

There is no shame in not getting asked to stay on at your fund. It certainly does not mean that you are a bad investor (if would be a different story if you had gotten fired). It just means that things did not go exceptionally well. There's a difference.

I just interviewed a guy from an "elite" HF (one that everyone here would know). He was pretty upfront when I asked him why he was leaving. He simply said that these positions are usually intended to be for 2-3 years and then out. He then told me all the reasons why my fund would be a better fit for him.

If it were me, I would go one step further. I would bring a spreadsheet of all of the names that I worked on, the ones that made it into the book, the ones that got passed on, etc. I would show the good and the bad, and just be 100% honest. If you did do a good job, you have nothing to hide.

I also think that you should not go from HF to MF to HF, as it shows lack of commitment. You will probably have to go downstream, but I also think that there is a huge gap between "elite" HF and "shitty" HF jobs that you talk about.

At this point in your career, you want to work at a fund that has scale but more importantly the ability for you to move up. In the end, given your age, this next job is where you will probably step up into a junior PM role. Even if you got another job at another "elite" HF, if there is no opportunity to advance beyond the analyst level, then that's probably not what you should be looking for at this point in your career.

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Sep 13, 2019

The awkward thing about my situation is that I had a high success rate with my ideas and actually made the firm a great deal of money. The real reason I am leaving is that I was probably too assertive with my senior analyst and he didn't like that. In retrospect, I was right and he was very wrong most times we disagreed. He has a nice seat and I underappreciated how much protecting his territory mattered to him. That said, few of my ideas ended up in the portfolio and many that didn't ultimately ended up being exceptional winners. Nearly all of my ideas were domestic shorts and therefore were never filed in a 13-F. The ultimate issue then is the story just sounds not real for a number of reasons if I portray it out fully.

1) If I disclose the facts, there is literally no way to make it come across like I'm not complaining about my boss or saying he is an idiot. I'm actually a fairly low ego person, but it will look like I'm delusional or cherry picking if I show the data since it will just show I worked on idea after idea where I disagreed with my senior analyst and ultimately my conclusion was correct and his was wrong. Generally, I feel like if I describe my contribution in terms of win/loss it comes over poorly because I am too young to claim I had a real contribution. It sounds like I'm lying when I say I contributed a very large $ amount to PnL and that I still am not staying, but that's actually what genuinely happened. I am concerned my future employer will see me as after their job, so I opted to just not mention this.
2) The second problem is that I worked primarily on shorts, so laying out what I worked on is disclosing a lot to a lot of people. For a number of mostly political reasons, it did not work out for me to work on longs. As a result, I am always unsure what I can and cannot say since the entirety of my experience was with shorts. I don't want to disclose what we shorted for example, since technically this could increase my former firm's cost to borrow. It's so awkward because I'm not sure how I am supposed to be commercial w.r.t. this experience since literally everything I did is sort of something that maybe I shouldn't talk about?

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Sep 13, 2019

A big problem with being totally transparent is that nearly all of my ideas were domestic shorts and therefore were never filed in a 13-F. For a number of mostly political reasons, it did not work out for me to work on many longs. As a result, I am always unsure what I can and cannot say since much of my experience was with shorts. I don't want to disclose what we shorted for example, since technically this could increase my former firm's cost to borrow. It's so awkward because I'm not sure how I am supposed to be commercial w.r.t. this experience since literally everything I did is sort of something that maybe I shouldn't talk about?

It's interesting that you say that a junior PM or senior analyst role at a great, but maybe not elite role could help more than a junior role at a more elite fund. I'm a bit scared however to mention that I am looking for upward mobility, because my general impression is that most senior folks at HFs are super territorial because senior guys have great seats usually.

If I disclose the facts about what I worked on and what the outcome was and the facts are overwhelmingly positive, then how does this not seem like I am complaining or saying that I think my former employer was making a silly or political mistake? Generally, I feel like if I describe my contribution in terms of win/loss it comes over poorly because I am too young to claim I had a real contribution.

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Sep 13, 2019
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