Hi guys, after gaining a lot of knowledge from the many useful topics on WSO I thought it would justified to give back a bit, even with the little experience I have. Maybe how I made my way to a hedge fund job is not replicable by many people as it includes a lot of luck but anyways it's always good to hear as many stories as possible when you want to enter the industry. I apologize for my English, it is not my native language.
I am currently a 1st year analyst at a major multi-manager hedge fund (think Millenium, Citadel, Balyasny etc...). I am based in Europe and I do L/S special situations.
Masters and First internship in Equity Research
After my bachelor in economics from a relatively good University, I did a Master in Finance from top 3 European business school (most people in Europe do a Master right after their bachelor and don't do a MBA). During my studies, I did lots of internship and even did a gap year to gain some practical experience. In total before getting my current job I had 2 years of experience (only internships) as I did internships almost every summer + gap year.
My first internship was in Equity Research in a research boutique. I got this internship because someone from my family works there. The year after, as I am a lazy stupid brat, I did not have an internship 2 weeks before summer but was saved by an alumni in a main local bank who was looking for an intern in Equity Research. As I already had experience in Equity Research, I easily passed the interview and got the internship. Then I took a gap year before entering my Master.
Second ER Internship
I spent the first 6 months traveling and was supposed to work the rest of the year. 1 month before the end of my trip I had not searched yet for an internship so I started panicking. Fortunately, I found out that my boss from my last internship just moved to a bulge bracket bank. So I gave him a call to see if he was looking for an intern for the rest of the year. 2 weeks after he called back saying he was allowed to have an intern so I can come and work for him for the rest of the year. The next summer (before my 2nd year of Master) I did another internship in Equity Research but on the buy-side this time as I found out sell-side was not for me (I hate marketing and seeing clients). It was easy to find the internship as I already had 3 experiences in Equity Research. If I had that many experiences in ER it was more because I was lazy to find something different than because of a passion for ER (even if I liked the job).
During my buyside internship, my job was to look at the ideas of my PM for about 1 week per idea and then I would pitch to him my opinion on it. This buyside experience was by far the most critical for entering the HF industry as I managed to secure several investment during the internship (it was a small fund and I was directly working for the PM), including 2 of my own ideas which I would later pitch during all my interviews for HFs. If pay would have been good I would have join this LO fund.
Decided to go the HF Route
After my Master degree I decided to try to go into HF because pay is way better than in LO even though the career center from my business school tried to deter me from doing so because "HF do not recruit junior people with no full time experience".
How I applied to HFs
I tried to look for names of big funds and came across a list of the biggest equity hedge funds. I sent an email to almost every equity PM and senior analysts from this list (about 350 emails), direcly asking for an internship with them. I would say that it is the most efficient way to get into a hedge fund when you are out of college. PMs recruit people for their teams themselves and HR are usually useless in HFs. It's a number's game. Find the name and email of as many PMs as you can and directly contact them to see if they are looking for a junior. There is almost never public job offers for juniors in HFs, so you have to ask. Also, PMs and teams usually work independently so it matters to contact many PMs and analysts in the same fund. If you are just out of college, there is no risk of getting a bad reputation for sending lots of applications. I guess that if you already have a job you have to be much more selective and careful about who you apply to.
After sending my 350 emails I got interviews for 2 funds and got 1 internship. What matters the most during an interview for an internship/junior position in a HF is that you got your pitches ready and near perfection because PMs are going to test you on these pitches. For me, I just had to pitch the investments I made during my previous buy-side internship. For the fund with which I managed to get an intership offer I had 1 interview with HR, then 2 with an analyst and then 1 with a PM. Luckily enough for me, one of my long pitch was a company that the PM knew very well so most of the interview was questions about this investment case (I found out later that the PM was short that stock and lost quite some money on it while I was long lol).
I did not like this internship at all. People did not give a shit about training me and I was doing the shit model filling work. Even though I interviewed with a PM, I worked for an analyst and I couldn't disagree with his opinion... And I was sectorised which I eventually found out is something I hate. To prove the analyst and the PM I was able to do smart work I even sent them some investment cases I did on the side of my stupid tasks but they did not give a shit (I was even more upset that I spent several weeks on each idea and that the few ideas I sent them performed quite well...). Even juniors were not doing very interesting tasks (Excel monkeys) so after 3 months I realized I was never going to do what I wanted so I started applying for other hedge funds.
Searching for another HF
I resent an email to the list of PMs I had gathered to find my internship saying this time I was looking for a FT job. I got 1 interview with a PM and got the full-time job I am currently working in. The interview was very similar to the one for my internship. I pitched my current ideas and the PM tested me on them and on my knowledge of financial markets. I quitted my internship 5 minutes after getting the answer from the other fund (I was desperate to leave that company, people were very arrogant, had no time for interns and juniors, and were not making good returns).
Setting foot in the industry
I would add that as a college graduate setting the foot in the industry is the most difficult part. It is a very closed industry where everybody knows each other and where people jump from one fund to the other (especially at multi manager platforms) so the most important thing is to get one HF name on your CV and then it's quite easy to get interview for other funds. Most people in my current fund switch every 3-4 years to other funds and turnover is quite high so funds are always looking to hire new people.
I got where I am thanks to a lot of luck but I was quite lazy by always applying at the last time. So I am pretty sure that for an person not as lucky as me but who is hardworking it might not be that hard to get into a HF. Just don't let people tell you what you can or can't do and do not feel discourage if you have to send hundreds of application before getting an interview.
I don't really know how to conclude this post and I am not sure it is useful to anyone so if you have questions on HF recruiting, please do not hesitate. I love my current job so maybe I'll do another post to explain what my daily tasks are as a junior analyst.
EDIT: I've written all this and I never spoke about graduate programs at HFs... Well, I was too late to apply for these programs and the 2 funds I work in do not run one so I don't know a lot about it. I would just say that if you are well before the deadline, it's probably the easiest way to get into a HF. However, very few funds run such programs.