moving from buy-side to sell-side

zaboomafooo's picture
Rank: Chimp | 10

i know the typical path is to go from sell-side to buy-side, but how difficult is it to do the opposite?

through some personal connections I currently have an offer as an analyst at a top hedge fund (think BlueCrest, York, CQS, Graham Capital) where the role is trading/research, i would like to eventually move to the sell-side to a market-making role.

how easy would it be to get sell-side interviews after doing a stint on the buy-side?

Comments (37)

Feb 10, 2012

This might be harder than you'd initially think. Many banks are reluctant to take on traders coming from a prop shop or hedge fund background as the work environment and risk policies are very different. I suppose you could move from a hedge fund to a bank desk but that applies more to prop desks or exotics rather than to flow market making in my opinion.

Out of curiosity, why would you like to move from a HF to a bank?

Feb 10, 2012

it's more that i want to move from a prop trading role to a market making role.

i think i would enjoy it more and be better at a market-making role based on my skill-set/personality

Feb 10, 2012

Isn't the comp better as a prop trader at a HF compared to an IB analyst?

Not that it's always about money... you should do what makes you happy.

Feb 10, 2012

yes my comp package is slightly better than my peers who are working at bb, but like you said, i should do what makes me happy

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Feb 10, 2012

Hey buddy, lower tier BB ER guy here. If your long term goal is investing, for the love of all that is holy, don't move from the buyside to the sellside. Granted you're in an internship, if you can get a return offer for the AM side of things, stick with it. If a sell side gig is all you have post graduation, then make lemonade.

I have yet to figure out who started this myth that sell side research programs provide better training. While I won't get into a discussion as to whether sellside research adds value to the investment process (that's a much lengthier discussion), what we do and what the buyside does is fundamentally different. Buyside folks are in the business of investing, sellside folks are in the business or generating trading volume and indirectly assisting the IBD of a large bank (not so much wall crossing as much as it is preserving relationships with company management). It just so happens that in the course of generating trading volume, we may engage in some activities similar to those you'd see on the buyside (e.g. modeling / valuation), but given the industry structure, the business is heavily tilted towards buy ratings.

I'd go into more detail, but it's late and I'm tired, respond if you have any specific questions about the training and such, and i'll be happy to answer.

Feb 10, 2012

^ Completely agree with the above. Do not move from a buy side position to the sell side just for a training program. You would be crazy to do so. If you're that worried about it, pay a few thousand for a Training the Street or similar program out of your own pocket. It's worth the investment.

Assuming you are a undergrad, you will almost certainly participate in a training program once you start full time. Also, I wouldn't worry about "f'ing up (your) investment career." Any decent buy side shop will keep the training wheels on and not allow you to make investment decisions the first few years. If they're really expecting you to make buy/sell decisions when you first start then you should probably join a different firm anyways.

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Feb 10, 2012

I wouldnt say "Never move to the sell side from the buy side ER" necessarily. It really depends.

If you are at a reputable AM shop, that allows you to do actual research- then you obviously dont leave. Your pay and training may be lower than your sell-side counterparts, but you will have a huge leg up.

If you are at a reputable shop, but youre not really doing research? I would probably wait it out, depending on the firm and how long they require you to wait (2 yrs=OK, >3yrs=Naw)

The question get's difficult when you are at a less reputable AM firm. These firms typically underpay by a large amount, and really dont get much better when you get to PM. You also dont get the same "Buy side" status from hiring managers/HR. Largely because they dont know the caliber of employee, the caliber of training, or what you actually did (people at smaller firms tend to inflate their roles). In this case, its usually better to make the move to the SS- and the earlier the better.

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Feb 10, 2012

It really depends. & the reason I wouldn't say "Never move to the sell side from the buy side ER".

Feb 10, 2012

Just a clarification in case anyone glossed over it, I premised my first response with "If your long term goal is investing" and was operating off the assumption that he/she is in an investing capacity in the AM arm of a large bank. Given this, I would reaffirm my earlier comment to not move over to the sellside under any circumstance if he/she is able to get a return offer on the investment side of their current internship.

Of course a sellside gig on a top ranked team at JPM/BAML/MS would be better than a no name fund managing <$10mn in most circumstances, but that does not appear to be the present case.

Also, it appears that he/she was inquiring about any specialized training that the sellside has that the buyside doesn't. Again, barring the most extreme examples as illustrated above, a buyside role teaches you how to invest, a sellside role teaches you how to sell (i.e. generate trading volume). Not criticizing the foundations of the latter (in this post), but that's just a factual description of what the two sides do.

Feb 10, 2012

What are your responsibilities at the fund right now?

Feb 10, 2012

I currently analyze potential investments and industries in depth for senior management.

Feb 10, 2012

When I worked in PB for another BB, the CRM group were the dumbasses who did most of the interacting with current clients when they were pissed off or had a question (but mostly pissed off). Because most CRM's didn't know what the fck they were doing (how funding worked, why margin was x% instead of y%, etc.), they'd just forward the client's question/comment to the most appropriate department within PB, berate the hell out of that person until they solved the issue, and then give the client a nice cheery call back.

The GS name is obviously nice, but you're gonna have to work your ass off for a while to move into a more analytical, fundamentally-based research/investment group (if that's what you want to do). Otherwise, just stick with BS. I wouldn't do that shit just for the name.

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Feb 10, 2012

Thanks HFer-wannabe. Since I've never worked in a bank before I didn't really know what the role was but it sounds like something I'd definitely want to avoid if I want to stay in the analytical realm.

Feb 10, 2012

Couldn't you try moving to another buy side shop? That seems the easiest answer.

Feb 10, 2012

it would be relatively easy I guess...i just feel that my network is severely lacking at this point, so it might actually be difficult to get into another buyside shop without the same recruiter going to bat for me.

Feb 10, 2012
chingwang:

the fund is starting to move more towards a passive management strategy rather than active management.

What exactly is a 'passive' hedge fund strategy?

Feb 10, 2012

etf based...less active stock picking, more just macro theme following with etf's

Feb 10, 2012

yes - sell side firms will sponsor someone who they think could make money for the firm

im assuming your referring to research (given the HF reference) - if you have the track record / experience in following companies, preparing models/research/analysis - you'll get hired.

you have to understand that these licenses aren't that big of a deal - its more of a regulatory thing that you're expected to pass. its only an issue if you fail and keep failing

I'm making it up as I go along.

Feb 10, 2012

its trading, not research. i suppose it doesnt make any difference though ?

Feb 10, 2012

if you fund is big/good you're likely set doing to sellside on connections and sector knowledge alone
think about it this way, sellside shops sponsor 27 year old MBA Associates for those exams all the time, and they would have less to offer than you would at that point

Feb 10, 2012

Don't worry about.... the bank will sponsor you when the time comes

Feb 10, 2012

Hahaha please stop saying you work on "the buy side." Your best bet is an MBA.

Feb 10, 2012

HFOF or FOF for that matter is likely only using a part of what IBD requires. If you cant survive in FOF, I dont think IB would be any better?

Feb 10, 2012

That's not what I mean. What I mean is I think FOF doesn't give me the right skills.

Feb 10, 2012

Going from the buyside to the sellside will always raise questions. Do you want to work at a hedge fund as opposed to a FOF? I would say best shot is MBA IMO.

Feb 10, 2012

Yes, I would like to work at a hedge fund as opposed to an FOF, but I'm told that the jump is highly unlikely, and I figured banking would give me the skills and exit opps. But I guess I would have to go to a top MBA program first...

Feb 10, 2012

Good point that nobody brings up on this board...the sell-side is litered with former hedge fund guys who couldnt hack it and go back to try to be in sales or market-making. Some of them actually do quite well. Another common move is for a younger guy to go work for one of the big hedge funds (the kind where just having that account can make you a wealthy salesman) and then leveraging those relationships into a sales position with a nice fat garauntee.

Feb 10, 2012

It depends on whether you prefer to be the salesman (working on behalf of your clients, face time, grunt work, etc.) or the buyer (getting your hands dirty in the due diligence process, building/managing a portfolio, etc.).

Odds of straight into buyside are approximately 11% (fewer openings, more competitive, unorthodox path)

Modeling is done on both sides

It is not always sell-side to buy-side although that is generally the case BC it is the more natural progression to do a 2-3 analyst stint in IB and then head off to a PE/HF shop.

Feb 10, 2012

One way to look at it is in terms of comp and lifestyle. Generally speaking, the comp / hours ratio will be significantly higher on the buyside, at least at lower levels, than on the sell-side. Comp higher up is probably more variable, due to various factors.

Feb 10, 2012
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