How to assess the attractiveness of a HF opportunity / heard of Tensile?
It seems really tough to assess on whether a HF is good outside of the massive / famous ones (Tiger cubs, Elliott, etc.)
Is there a way to assess smaller hedge funds? I looked through WSO and WhaleWisdom but could not find much.
My main questions are:
- What amount of AUM is 'too small', if ever?
- What is good public market returns? (e.g., ~15%+??)
- I imagine looking at that background of current team members is important as well
- Anything else?
More specifically, a buddy of mine shared a new job posting from Tensile Capital but I wasn't able to find anything on it
bump
bump / Merry Xmas
1. If you are starting out, I wouldn't go below $250mm. If the fund is any smaller, it is extremely challenging to scale (no matter what the founder says).
2. Hard to say because it depends on the fund's strategy, exposures, and the composition of those returns. The other problem is the duration of the fund's track record -- i.e., oftentimes, there just aren't enough years of data points to make a determination.
3. Looking at the team is helpful. If the quality is above average, then it is certainly worth taking a look and interviewing with them.
4. If you get an offer, ask them for their investor presentation and letters. Before I joined my current fund, I received offers from other funds and I asked them to put me in touch with former analysts as reference. I also reached out to a friend who worked at an endowment to see if he had ever met with or heard of the funds I was interviewing with. You can also learn a lot about a fund just by how they treat you through the interview process as well.
But other than that, that's pretty much all you can do!
Can you provide more color on the AUM cut off? Have an opportunity to join a HF with a strong track record for the last ~15 yrs, but AUM is pretty small (~$50M). Was offered market base (~120) + 100% of base in bonus, with a % of PnL after a few years. Current IB analyst with a couple yrs experience.
Yeah, I'd pass. If the fund has a good track record and has been around for 15 years, then why is it only $50mm? In any case, this sounds like some rich guy's PA -- excuse me, family office.
Second this
Super helpful response - thank you!
Any thoughts on Tensile in particular? Saw a job posting from them on my friend's company job board and seemed interesting
Unfortunately, I don't know them.
Check their holdings through 13F for a rough idea of their AUM trend. It should be steady or increasing if their performance has been up to expectation.
Ask an LP. Tensile is a well-respected, long-term oriented value investor doing bottom-up research. If that's what you're interested in, I recommend applying.
Super helpful. Thanks for sharing.
this may be a dumb question but is there an easy way to ask an LP this kind of question?
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