Learning skills to move to long/short equity funds

trader123joe's picture
Rank: Chimp | banana points 7

I am about to start as an analyst at a fixed income hedge fund focused on relative value strategies. Its unclear to what extent I will get experience doing fundamental research, but it seems like I won't be doing a lot of it. I have a few months of free time this summer before I start work and am looking for a way to ensure my modelling skills are as good as those of my friends going into banking. What can I do besides practicing putting together models to ensure that this is the case? How can I prove to long/short equity hedge funds that I am worthy of interviewing and that I can carry out the kind of financial analysis they need? Is there anything in particular that I can do this summer that can signal my interest and ability, and help me with this? Thank you for your help.

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Comments (9)

May 14, 2017

I dont think there is a shortcut to that. Unless you do modeling urself, you wont learn it. Just out of curiosity, why so eager to join long/short equity if you are still yet to start at fixed-income fund?

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May 16, 2017

Mostly for three reasons which may be all wrong:
1) I actually think looking at and modelling individual companies might be a more exciting job than having a more macro view on things.
2) I might be wrong on this but it seems like it may be easier to find alpha in individual stocks as opposed to fixed income relative value where a lot of leverage is applied to stretch out a few basis points of pricing inefficiency.
3) The universe of well-known long short equity hedge funds (at least the ones I'm aware of) seems to be much larger. Granted it does seem most hedge funds are having a bad time these days.

Would modelling companies and posting my ideas online (e.g. on Seeking Alpha) prove to companies that I'm interested? Do analysts ever reach out to headhunters themselves or just apply directly to the L/S funds' websites (or does that not work)? Perhaps I'm jumping the gun and should just give myself some time to judge how I'll like my fund...

May 16, 2017

The credit side will still teach you how to value a company. You are just in a different part of the capital structure. Going from FI to equity should be an easier transition than the other way around.

"Give me a fucking beer", Anonymous Genius

May 17, 2017

I agree that the credit side will still teach me how to value a company, but I feel like my fund doesn't do a lot of fundamental analysis.

So is there nothing that you would advise me to do over the summer apart form practicing modeling? Should I reach out to headhunters? Should I try to network somehow? Have you heard of someone doing something particularly useful over their senior summer that helped them and might be useful in my case

Best Response
May 18, 2017
<span itemprop=name>trader123joe</span>:

I agree that the credit side will still teach me how to value a company, but I feel like my fund doesn't do a lot of fundamental analysis.

So is there nothing that you would advise me to do over the summer apart form practicing modeling? Should I reach out to headhunters? Should I try to network somehow? Have you heard of someone doing something particularly useful over their senior summer that helped them and might be useful in my case

Being a successful relative value FI analyst/trader/PM/ whatever is going to be difficult if you don't understand fundamentals. If you don't know how to properly value a credit, it's history, where it fits its industry/ sub-sector, fundamental drivers and how they are likely to perform going forward, why it is trading wider than peers, etc. it is going to be difficult to figure out why it may be mispriced.

I would echo the other thoughts above. Take one step at a time. Start the job, keep your head down and kick ass. Then figure where you want to go from there and what you will need to do to make it happen.

"Give me a fucking beer", Anonymous Genius

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May 18, 2017

establish yourself at the fi hf before anything else...one step at a time

I AM THE LIQUOR

May 18, 2017

I think you are getting way ahead of yourself here. You haven't even started your FI job yet. You can do some modeling to prepare yourself before you start but your focus should be to excel in this FI job first before planning for the next move. Heck... You might even like the job.

May 18, 2017

I'm in the industry. In all honesty, what you know/read/learn matters little. It's about how successful you are at applying it.

Open an account. Fund it. Trade for a year. Build a great track record and you'll have people knocking.

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May 19, 2017

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