Investment Banking to a Hedge fund... Can You Make the Jump?

***Note: This is a summary type post and is broad in scope, the sections are outlined in BOLD so if you have no interest in the overview you can skip to the interview section etc... Good luck to all of you starting (or doing) hedge fund interviews right now... hard work + luck = JOB. ***

Overview and Landing an Interview
The career path to working at a hedge fund is less defined than that of investment banking, but at the junior levels the majority of opportunities are available to those with backgrounds in either research or investment banking.

The best way to land a hedge fund interview is through networking, but... a large portion of the recruiting process is outsourced to headhunters, who primarily target bankers and research analysts in their searches (management consultants are also successful).

The job responsibilities are not exactly the same, but the skillset and intelligence necessary to be a junior banker serve as a baseline for the kind of work that is expected of hedge fund personnel. Hedge fund managers are busy people, so they recruit from pools of bulge bracket bankers for the same reason that bankers recruit from target schools.

This post will assume that you have secured a hedge fund interview and will focus on the interview process from the perspective of a junior investment banker.

Part 1: What you need to Demonstrate
So you got your foot in the door. Great. Now it's on you to show them what's in it for them by demonstrating the following:

1) Passion and Ambition: They want to know that you love the markets and investing. Unlike banking, they want people who are both capable and enjoy what they are doing. You have to live and breathe it.

2) Creativity: Can you think about things in ways that others may not have thought of? Can you take a view based on that? Hedge funds live and die on information. Creativity is necessary to uncover what others overlook and come up with ideas, so they want to know how you think and that you can rationalize your opinions.

This can be a nightmare for many bankers who were stuck working in a group where they are primarily processing mundane information that does not allow much room for thinking for yourself.

3) Cultural Fit: They are going to be working side by side with you for upwards of 12 hours a day. They want to know if they can get along with you.

Unlike in banking or private equity, hedge fund cultures tend to vary a lot because they are almost entirely dependent on the portfolio manager (similar to equity research where an associate is tied to the Senior Analyst/Managing Director). Cultural fit can be much higher on a hedge fund's priority list than it would be for a private equity shop.

It's also important to remember that cultural fit is a two-way street. If you can't get along with an interviewer you during a 30 minute meeting, then once you start working with them your life is going to be miserable. Don't worry many of them are incredibly good at faking their personalities so it will be impossible to tell which one to work with... But as they say you can't win them all.

Part 2: Preparation
Now that you've got the basics down, here's what you need to prepare specifically for a hedge fund interview:

Basics: Size, location, history, anything you can find on their website, profile of employees on Linked-in, etc.

Strategy: Equity Long Short, Distressed, Merger Arbitration, Event Driven, etc.

Mandate: Are they restricted to investing in particular security-types or sectors?

Investment Philosophy: How do they think about investments?

Investment Horizon: Typical holding period, structure of their capital base, do they have lockups? Can they take volatility?

Culture: Talk to the head hunter or the person that referred you to see if they know anything about what to expect from the interview or to get insight into what the culture is like. You can also use networks to see if you can talk to someone who might have extra insight into how the fund operates.

*** Resources you can use for research: research reports, CapitalIQ / Bloomberg, SEC filings, networking connections who may have insight, the Company website and of course you should always do a heavy Google search***

Questions: Based on the research you did on the fund, come up with intelligent questions to ask them about their strategy, culture, recent investments, etc.

Market Knowledge: Be up to date with what's going on in the general market and trends in the specific sectors / areas that the fund invests in.

Investment Ideas: You are going to be asked to talk about an idea you are currently thinking about, so come up with at least two investment ideas / stock pitches.
The process for doing this is explained below

Part 3: The Interview
The exact structure of the interview will vary across funds, but in general the process will consist of two or more rounds, we'll stick with two rounds for simplicity:

Round One Onsite: This is the actual "interview" portion of the process. It will usually take place at the fund office. They will have anywhere from 2-10 of their current employees (depending on fund size) each interview lasts for ~30 minutes to 60 minutes each. . For the first round you don't necessarily have to have to go as far as building a fully-baked model and investment memo (that will come in the case study) however... You do need to be able to articulate and defend your idea verbally though.

Cultural / Fit: These questions are about your background and are designed to get a sense of who you are and assess your cultural fit with the fund. Most of them are going to be exactly the same as those asked in investment banking interviews. By this point you should have a firm grasp of your story and be able to explain why you want to work at a hedge fund.

They are going to evaluate your cultural fit and personality throughout the entire interview. Your personality should show through via body language, attitude, communication skills and general demeanor. They'll want to see that you are positive, excited, enthusiastic and hungry.

You will also need to demonstrate a certain amount of humility and be open to criticism - it's not uncommon for interviewers to take a viewpoint counter to yours and argue with you just to see how you handle disagreement.

Having a good sense of humor never hurt anyone either.

Technical / Thought Process: The technical part of the interview will take up the bulk of it. It is much different than for banking. They are going to assume you know how to do things like build a model or spread comps, so you won't get any "walk me through a DCF" type questions.

Instead, they want to see that you are able to use whatever information and skillsets that you have in order to develop and explain opinions and ideas. They want to know what your thought process is like.

Questions:

Walk me through a deal you worked on / What are you working on currently?

This is less about explaining the process of a deal than it is about seeing if you can form opinions about them. Tell them whether you think X deal that you worked on was a good idea for XYZ client and be able to explain why you think that deal was good for the firm long-term. Remember to switch your mindset to that of an investor, it is also smart to state a possible risk to the deal as well.

Walk me through how you would form an investment idea.
This means broadly explaining the steps that you would take informing and evaluating an investment recommendation. This is the same framework that you will use to describe your investment idea (see below).

How would you value XYZ company based on XXX information?

They may ask you to explain how you would value a company based on very limited information. This is where you have to think past the usual DCF / Comps / Precedents and figure out the best way to approximate how much something is worth when you don't have much to go on. Keep in mind that it's better to be approximately right than exactly wrong.

What do you have in your personal trading account?

Unless you somehow managed to become a millionaire in your junior stint on the sell-side, it's unlikely that your PA is going to be anywhere near the size that would be necessary to invest like a hedge fund. This is therefore not necessarily the time to pitch the investment idea you prepared.

Instead, take opportunity to talk about your big picture investment philosophy based on your personal circumstances and goals - you can talk asset allocation, broad market trends, why and how are you investing for yourself.

Your investment idea can be included here if you want, but should be positioned as a speculative investment that you have made as opposed to a significant part of your overall investment strategy.

Give me an idea that you are thinking about.

As mentioned, in your preparation you should put together at least two investment ideas or stock pitches to have ready to go... Here is the set up:

1) Tailor at least one of your ideas to the fund's strategy (e.g., if it's a L/S shop, have a pair trade ready to go, if it is a Merger Arb fund you should have a few pending deals in your back pocket... you get the idea)
2) The second idea that can be anything. It could be based on a recent deal you worked or something going on in your coverage area, or something you read in Barron's/a research report last weekend. Of course the more work you do the better off you are... The harder you work the luckier you get.
3) Presenting the idea, you want to walk them through the process and explain your decision making at each step:
4) Inspiration / how you came up with the idea
5) Model the company (details are better but errors can ruin your chances - a balance)
6) Conduct background research about the company
7) Refining the original thesis based on research and model
8) Coming up with a valuation for the company
9) Making an investment recommendation based on that valuation (buy / sell)
10) Listing any possible downsides / risks, along with any mitigating factors

Be prepared for the interviewer to poke as many holes in your idea as possible no matter how airtight you think it may be. They want to see if you can defend your idea or admit to overlooking any issues they may bring up that you didn't anticipate.

What else are you thinking about?

They may also ask you about any other general themes you have been following, so be able to discuss some other trends and your general thoughts on them.

Part 4: The Case
If you pass the first round, the next step is the case study. This entails evaluating an idea in more depth than your investment idea. Typically, case studies will involve coming up with an idea and presenting it to them in the form of an investment memo.

Case studies can be both on-site, where you will be given space in their office and 3-4 hours to work on it there, or take-home, where you will be given anywhere from 12-36 hours to come up with your idea.

Case studies should be approached in the same way as your investment idea, but should be completely fleshed-out. That means building a model and knowing whichever company you pick cold. You can also get extra points if you can think of a novel way to uncover public information about the company that others might not.

Once you have put your model together and finalized your research, you want to put it into an investment memo. This can be either a PowerPoint presentation or a word document.

A general outline for an investment memo would be:
1. Recommendation: Lead with what you are recommending and why so they know what conclusion you are working towards
2. Company Overview: You should have put together plenty of company profiles in your time as a banker
3. Investment Thesis: Explain why you made the recommendation you did, and be able to back it up with evidence
4. Time Frame / Catalyst: Explain and support how and when you think your thesis will come to fruition
5. Valuation: Use your model to provide an overview of whatever method(s) you used to arrive at your valuation (DCF, Sum of the parts, etc.)
6. Risks: Every idea is going to have downside potential. Explain any possible risks and why you think your idea has a risk / reward profile that mitigates them

***For further details on case studies look at the other WSO post here written by big unit: http://www.wallstreetoasis.com/blog/breaking-the-h... (great timing!)

Part 5: Eat Sleep Rave Repeat
Assuming you pass the case study, the final step will be checking references... Get ready to chug vodka tonics and black out after signing the dotted line (joke... sort of). Once you're signed feel free to let loose before the grind begins.

Comments (37)

Best Response
Feb 28, 2014

This is a good post. However, having a personal account has LITERALLY gotten me through many first rounds. I believe I have what most candidates do not have; A LOT of skin in the game... And I'm not talking about Google longs, more along ETF asset rotation strategies, Closed end fund logics, etc... bottomline, open a trading account as an undergraduate with 1k and start trying to do some investing with your ideas. if you lose money, it's 1k you can write off in taxes OR consider it an education expense. open a Personal trading account asap.

.

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Mar 1, 2014

Agree. Legit criticism/caveat. If you want to work in a HF yes everyone should at least have a PA.

Feb 28, 2014

Gold. Thanks so much for this.

Mar 5, 2014

I haven't heard of interviews like this. This may happen at some of the fundamental funds but I'm not sure you'd find an interview like this at a large quant fund like a Bridgewater or DE Shaw. I have not really heard of anyone getting a case study.

For a research team at a larger fund, the interview is going to get somewhat technical. You're going to see questions on stats, econometrics, maybe a little stochal. These days machine learning and algorithms are also important.

They may throw a few Journal of Finance papers at you and ask you to explain them. (After reading the abstract and a quick skim of the model, I tend to go straight to the results/backtest table and look at the t stats)

They may put an R terminal in front of you and ask you what is going on with a certain data set.

If you have a particular product background, you may get drilled on that. EG: when is OAS going to be very different from CDS spread.

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Mar 5, 2014

Illini's kind of right. I've interviewed for both DE Shaw (prop) and Bridgewater (investment associate), neither had anything resembling a case study. Also, neither asked me anything near as technical as the above (and I have two STEM degrees)

Every distressed / value fund I interviewed with DID have a case of some kind though.

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Mar 5, 2014

Isn't the major reason for Illini's experience because of his quant background? I don't htink @"Wallstreetplayboys" is talking about quant funds at all... Even considering the fact that he's talking about IBD, as in advisory work to HF implies that he's talking about value/fundamental shops.

Mar 5, 2014

I remember a poster here (bondarb?) said that Bridgewater's funds are largely discretionary. How quanty is a place like Bridgewater compared to RenTec or D.E. Shaw?

Mar 5, 2014
Menascyn:

I remember a poster here (bondarb?) said that Bridgewater's funds are largely discretionary. How quanty is a place like Bridgewater compared to RenTec or D.E. Shaw?

Bridgewater probably has some traditional stock pickers there, but my understanding is that many if not most if their employees have quantitative roles.

Mar 7, 2014
IlliniProgrammer:

They may throw a few Journal of Finance papers at you and ask you to explain them. (After reading the abstract and a quick skim of the model, I tend to go straight to the results/backtest table and look at the t stats)

They may put an R terminal in front of you and ask you what is going on with a certain data set.

If you have a particular product background, you may get drilled on that. EG: when is OAS going to be very different from CDS spread.

Do you like throwing around random terms and pretending like somehow what you're saying adds any value other than to your own ego, or do you legitimately believe that most people think of a Bridgewater or Citadel when they think of what a hedge fund is? You've been on WSO for a long time - how many times do you see a post that doesn't directly specify "quant fund" in the [much less frequent] event they are inquiring about a quant strategy? This just sounds like mental masturbation to me, but hopefully it at least gets you off.

And for the record, I interviewed with Shaw and Citadel out of school and never got anything close to this kind of stuff. brainteasers and consulting-esque TAM estimate stuff was about as complicated as it got. Maybe things have changed that much since then, but I think OP's guide is still relevant no matter what type of firm you're interviewing for.

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Mar 5, 2014

I just think it's really important here to distinguish between the traditional fundamental funds and the higher profile quant funds that college students and even many finance people think of when they hear "hedge fund". I guess my point is don't walk into DE Shaw or Bridgewater or Renaissance expecting case studies and IBD models unless you're sure that's what they're hiring you for.

If you're a VIX or CDS trader at a large bank, Citadel or AQR probably isn't hiring you to run fundamental valuation models on individual firms. Prepare for stats and product questions, not cases.

I think we're talking about a somewhat narrower space within the business here with the traditional fundamental funds. If you're giving advice on classic Rolls Royces, we need to qualify this and not generalize it to all European cars.

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Mar 5, 2014
IlliniProgrammer:

I just think it's really important here to distinguish between the traditional fundamental funds and the higher profile quant funds that college students and even many finance people think of when they hear "hedge fund".

I'm just going to disregard the fact that you neglected to notice this was posted in the "I-Banking Bullpen," which should probably make all of your points irrelevant, but...

Seriously? When people think "Hedge Fund," names like Baupost, Blue Ridge, Tiger Global, Tiger Management, Third Point, Appaloosa, Pershing Square, Viking, Lone Pine, Maverick, Coatue, Moore, Quantum, Tudor, SAC, Eton Park, Trian and Brevan Howard don't come to mind?

You're going to tell me that Tepper isn't "high profile"? What about Ackman? Loeb? Mandel? Laffont? Peltz? Klarman? John Griffin? Coleman? PTJ? Bacon?

Either you enjoy being a caricature or you're proof that perfect test scores and an Ivy League degree don't mean you're smart. (With all due respect)

Yes, case studies are, in fact, a common part of the interview process for fundamental shops.

I think posting this in the "I-Banking Bullpen" was enough qualification as I don't know many GS TMT analysts trying to move to a quant shop... but let me go run some algorithms and see if I can give you a definite answer...

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Mar 5, 2014

Good stuff, thanks.

dollas

Mar 5, 2014

If you look at the AUM tables, you have Millenium, Bridgewater, Citadel at the top. These are all primarily quant funds. Moreover, regardless of where this was posted, this is now on the front page of WSO for all the folks in sales and trading and quant research who are heading to the larger quant funds.

A fundamental hedge fund is a very specific kind of hedge fund, and OP is advising people to put 6 volt wiring in their cars without qualifying it to mention that he is working on a classic Rolls Royce and that all cars since 1970 use 12 volt ac.

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Mar 5, 2014

Don't really understand this criticism.

If you work in investment banking here is the outlined path to a hedge fund.

It is not like you can suddenly become a quant while working 80+ hours a week in investment banking right?

Agreed with your previous point about the different types (paths) but saying this is not accurate is a stretch the title says "IBD to hedge fund". This is the basic path again **if** you are tying to jump from investment banking.

Think this is fair.

Mar 5, 2014
IlliniProgrammer:

If you look at the AUM tables, you have Millenium, Bridgewater, Citadel at the top. These are all primarily quant funds. Moreover, regardless of where this was posted, this is now on the front page of WSO for all the folks in sales and trading and quant research who are heading to the larger quant funds.

A fundamental hedge fund is a very specific kind of hedge fund, and OP is advising people to put 6 volt wiring in their cars without qualifying it to mention that he is working on a classic Rolls Royce and that all cars since 1970 use 12 volt ac.

Yes, because AUM is the sole determinant of the quality and "profile" of a hedge fund.

Coincidentally, the title of the thread is, "Investment Banking to a hedge fund..." which would probably signal to all the folks in sales and trading and quant research that this thread might not be that relevant to their particular situation... Let me go run another algorithm and let you know...

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Mar 5, 2014

Ha got a legit lol over here.

Using the car analogy this is like owning a BMW and complaining when the Ferrari dealer won't fix your BMW... Why are you reading about fixing a Ferrari if you own a BMW...

His caveat was correct and the title makes the clear distinction that this is IBD to HF.

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Mar 5, 2014
Simple As...:

Yes, because AUM is the sole determinant of the quality and "profile" of a hedge fund.

For the record, that's not my argument here. My argument is merely that AUM in some sense represents the ability to employ people.

Mar 5, 2014
WallStreetPlayboys:

Ha got a legit lol over here.

Using the car analogy this is like owning a BMW and complaining when the Ferrari dealer won't fix your BMW... Why are you reading about fixing a Ferrari if you own a BMW...

His caveat was correct and the title makes the clear distinction that this is IBD to HF.

I'm not sure if it was your intention to make a front page post, but now that S&T analysts, fixed income research guys, and everyone outside of IBD is reading it, please consider changing the title to "fundamental hedge fund" to avoid causing confusion for your wider audience. People WILL read this to get advice on their upcoming hedge fund interview at DE Shaw.

If a car mechanic runs an ad in Ferrari Magazine stating "Ferrari Dealer: we can fix any car!", that's going to get read one way. If he runs the same thing in Car and Driver, it might make sense to change it to "We can fix any Ferrari!", lest they get a bunch of phone calls from BMW owners.

Nothing personal. It's just that you need a little more context for a broader audience on a front page post.

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Mar 5, 2014

Still don't really understand.

IBD to hedge fund is generally a fundamental role... So the title is self explanatory if it said "how to get into a hedge fund" your point would be well taken... But it specifically says investment banking right there in the title.

Finally, it is not like there is a "front page option" for Wall Street oasis. If they don't want to put it on the front page no big deal if they do great... It's their home not mine so you're choking the wrong throat my man.

To put a nail in the coffin don't care if they change the title to "fundamental hedge fund" all good but if someone reading doesn't know the difference... Good luck wit dem interviews.

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Mar 5, 2014

Not sure if serious...

I honestly cannot fathom that a person who has an actual interview at DE Shaw, Citadel, Ren Tech, etc would read this post and not realize that this isn't actually applicable to their interview process. And if they did, I'm not sure it would matter because I doubt they'd be a legitimate candidate for the position. I mean, do these places really hire people that don't understand the job functions of the position they've been hired to do? Probably not. And do the people applying to these positions that receive interviews lack the critical thinking ability to determine that this post isn't meant for their position? Probably not.

And who are these S&T analysts, fixed income researchers and quants that can't decipher the title of the thread? I doubt any exist. And if any do exist, again, I'm not sure it'd matter because they don't stand much of a chance anyway.

Instead of asking someone to make a superfluous change to the title of the post, why don't you make a thread about the interview process at quant funds? I'm sure there a young quants that would really find that helpful. Although, you might be too bust trolling about Quant prestige, rusty hondas and how we should all spend our money to do so.

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Mar 5, 2014

well...this thread took a wrong turn to shitsville pretty quickly haha

Mar 5, 2014

Well, if I did, as you noted, I'd certainly qualify my title with quant hedge fund. Incidentally, I did add that advice in this thread.

I haven't really said anything mean or derogatory. Other people have come out and agreed with my post. I'm not sure how you call my posts trolling rather than having a different worldview.

When I was 23, I would have gotten confused by this thread. Now I work for one of these funds. Some people are more sophisticated than others; the goal of this site is to help everyone get more sophisticated. A lot of people will get confused by this if they're a year or two out from an interview with a quant fund or a fundamental fund, and we just need to make sure they're getting the information they need. Finally, investment banking does not necessarily mean IBD in all contexts. I have met traders and research people who say they work in investment banking- IBD is a kind of job; investment banking is an industry.

I'm glad we're having this discussion. There are a lot of college kids and even analysts who are confused by the nomenclature system in finance. Honestly at the end of the day we just want people who have excellent technical skills and are just barely sophisticated enough to know what kind of job they might enjoy and be a good fit for.

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Mar 5, 2014

Nothing like a good old monkey shit throwing party.

All that aside some serious time was put into this overview so hopefully we can all get along and focus on the point.

So we can make Illi Villi Manilli happy lets re-remind:

"IBD -> hedge fund is generally for fundamental roles. This is NOT for a Quant hedge fund"

carry on.

Mar 5, 2014
WallStreetPlayboys:

Nothing like a good old monkey shit throwing party.

All that aside some serious time was put into this overview so hopefully we can all get along and focus on the point.

So we can make Illi Villi Manilli happy lets re-remind:

"IBD -> hedge fund is generally for fundamental roles. This is NOT for a Quant hedge fund"

carry on.

Thank you WSP for this thread. Brilliant stuff. I don't get why people are trying to poke holes in it with irrelevant arguments instead of giving you more SBs. +1 from me.

Mar 5, 2014

Obvious troll is obvious. Nobody would have thought of this post as being relevant to quant funds. The side 'discussion' completely derailed the thread.

Edit: PS -- I didn't throw any MS.

Mar 6, 2014

IlliniProgrammer just likes to derail threads w/ tl;dr comments - at least I make it funny , geez

anyways would b gud to hear everyone's insight, especially those who have gone through the process

speed boost blaze

Mar 6, 2014

This was a good thread and IP found a way to hop in and ruin it in the hopes that a bunch of college kids would hop on his dick. He could then pontificate on the sheer ignorance of the unwashed masses at fundamental l/s funds. Finally, we might all get a chance to bask in his brilliance.

I've never tried to get into a flame war on WSO (look at the SB/MS ratio) but I really can't stand your posts. They scream of insecurities and arrogance. Like I said before I hope you find some esoteric way to make enough money for your farm and a fleet of rusty hondas, but your posts scream of a giant chip on your shoulder.

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Mar 6, 2014
Gray Fox:

This was a good thread and IP found a way to hop in and ruin it in the hopes that a bunch of college kids would hop on his dick. He could then pontificate on the sheer ignorance of the unwashed masses at fundamental l/s funds. Finally, we might all get a chance to bask in his brilliance.

I've never tried to get into a flame war on WSO (look at the SB/MS ratio) but I really can't stand your posts. They scream of insecurities and arrogance. Like I said before I hope you find some esoteric way to make enough money for your farm and a fleet of rusty hondas, but your posts scream of a giant chip on your shoulder.

+1

Being simultaneously insecure and arrogant is hard to pull off, but somehow he has found a way.

(PS -- I enjoy conflict both here and in real life, it's the spice of life and based on this post I see you have strong potential to be abrasive, should you choose to be. Bravo sir.)

Mar 6, 2014

I don't mind trolls as long as they are funny or entertaining...otherwise the only thing to do is simply ignore.

Mar 7, 2014

I'm tempted to walk away from this thread. But it will show up in search results for "hedge fund interview" for years. At least a few posts need to be from someone for whom 60% of the searchers will actually benefit from.

1.) Whenever I refer to firms like Citadel, DE Shaw, or Kepos, I call them "quant hedge funds", out of respect to the industry and the fundamental hedge funds.
2.) These quant funds may very well have a majority of AUM, may very well receive a majority of management and performance fees, and may very well employ a majority of people in the hedge fund industry. There also seems to be some insecurity by the IBD folks over which funds have higher quality (EG, where the money is heading, Sharpe ratios, or BARRA-adjusted alpha). This is not a debate that I have started nor that I want to get into in this thread. However, insecurity was mentioned earlier.
3.) Meanwhile, IBD people (even though they're a small percentage of folks employed by investment banks who no longer account for a majority of the revenue) call themselves "investment bankers", to the exclusion of traders and research people, and use nomenclature that suggests that fundamental funds represent all or most hedge funds.
4.) A bunch of IBD people- sorry "investment bankers" get all red in the face and call me arrogant when I suggest they change a small portion of their nomenclature when they run a thread that is published on the front page of Wall Street Oasis. They are not being arrogant at all. Rather, I am both arrogant and insecure for suggesting they make a change to their nomenclature to show the non-IBD people the same respect we show them.
5.) It would be really, really nice if you did not assume that our potential hires were aware of everything going on in IBD (many of them do not even consider it) and did not confuse them about our interview process as you try to help your people move from IBD to a fundamental hedge fund.

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Mar 7, 2014

On a somewhat tangential note, is Bridgewater really considered a quant fund? Their strategy is global macro rooted in unconventional economic theory, which seems quite different from the names that are typically labelled quant funds.

Mar 7, 2014

Great Post!

Quick question on the personal trading account. I used to have one but now that I'll start working in IB, I'm worried I might get taken out of deals that I have stock in due to a conflict of interest (happened to another intern). Is it that big of a difference to have a PA? Is there some alternative I can possible try?

Mar 8, 2014

Regarding the PA comments the general rule of thumb is to avoid your space if you work in say IBD Healthcare you would want to invest in a different type of industry to avoid compliance issues.

Depending on the bank generally, they have a restricted list that you can't trade because there is a conflict of interest. The best way to mitigate this issue is as follows:

1. Check the restricted list to make sure you are clean
2. Do your research and take a position ideally near or close to your space so your interview pitch makes sense later on IE: if you work in the M&A group buying or selling stocks on a merger arbitration basis probably makes more sense than you buying penny stocks in some sort of cannibis play (you get the idea)
3. Try to expand your reach a little. IE: if you work in healthcare only, maybe you can look into some bio-technology stocks. Not perfectly related but it makes your pitch sound more legitimate. If you work specifically with restaurants... it wouldnt be far fetched to branch out and invest in say "clothing stores" etc. etc.

Basically there is always a place to invest. The one key thing in the original post is that you need to **think** like a hedge fund. So you can't be pitching an investment like an individual again, one more example, if you pitch TSLA call options and that is 10% of your PA... well thats fine for you but if you pitch that to a PM of a $10B fund... he's gonna be piiiiisssseeeedddd.

Good luck and definitely get some investing experience!

Mar 7, 2014

Mar 7, 2014
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Mar 8, 2014