Networking 101 -- Hedge Fund Edition

In my recent AMA thread I was asked how I transitioned from a corporate strategy role to a hedge fund analyst position. I struggled to give what I thought was a sufficient answer given the context of the question so it kind of inspired me to write a short series about my experiences beginning with what I have learned about networking. As of now my list of topics consists of:

1) Networking 101 - Hedge Fund Edition
2) The Asymmetric Risk Profile -- Preparing for the hedge fund interview
3) ABC - The Successful hedge fund interview
4) I Choose You [To Be My Boss]
5) On the Job with Simple As...

These posts will be published over the next few weeks sporadically because of travel and the demands of an expansive coverage during earnings season. But, without further delay I'll get to the actual point of this post:

Networking 101

A simple search of the word "networking" on WSO yields 6899 forum topics and 501 blog posts. Therefore, it is safe to say the topic has been covered sufficiently over the years. However, the most important part of networking, which happens to also be the most overlooked, is maintaining and leveraging the relationship in to a meaningful recommendation or actual job offer.

This part of the networking process is especially important for those attempting to enter the hedge fund industry without the benefit of a headhunter or OCR because of the unstructured and ad hoc nature of the recruiting process. As an example, the time between my first interview and job offer at my current fund was eight months. Growing the relationships I built through each stage of the interview process was paramount to receiving an offer.

It sounds simple, but I have found the key to networking is to be a value - add for the person with whom you are trying to network. It all starts with the original meeting/interview and builds from that point. I firmly believe that a person's approach to anything must be intuitive and adaptive rather than fixed and mechanistic [credit to Howard Marks], but I do have three hard and fast rules for successful networking:

1) Make it a conversation rather than an interview

a. The topic of the meeting will inevitably turn toward the markets or individual securities. You want to use this as an opportunity to show your knowledge, ability, and passion for the industry. Add insights about the market/securities and make the meeting a conversation among equals rather than firing canned questions one after another.

The individual will enjoy himself/herself more and you will have the opportunity to make a positive impression. This is not a license to force some poor soul to listen to your diatribe about economics or market theory, but a real way to show you are an intelligent individual with a passion for investing. Offering up small insights and asking smart questions about topics that come up in the course of the conversation will go a long way towards making a positive impression and setting the foundation for a meaningful professional relationship.

2) Do Not Simply Ask for a Job/Introduction

a. Simply by contacting the professional you are signaling that you are interested in a similar position and working at his/her firm. Rather, focus your time and energy on making a good impression and showing the person in a real, tangible way that you are worth the investment of time, energy and reputation. If you make a good impression the rest will take care of itself.

3) Keep the Line of Communication Open

a. Keep in touch with the person every so often by continuing to add value for them. You probably talked about companies he or she follows or things about industries or the economy on which they focus. Periodically, send them an interesting link or bit of information that could be helpful to them. It is OK to say something in the email along the lines of, "I'd love to hear your thoughts about [insert what you sent] if/when you have time." but do not expect an answer or get frustrated if you do not receive one. Remember the key here is for you to add value for them, not the other way around. Chances are he/she has already seen the information you will send, but showing your ability to procure good sources of information and that you are constantly paying attention to the market will go a long way.

One caveat I feel I have to mention is that it is obviously important to speak intelligently with the person and provide only good sources of information. Sending the greatest piece of information or providing an amazing insight in a conversation is unlikely to get you an offer on that basis alone, but sounding like an idiot or sending an absolutely terrible piece of information can ruin your chances. Therefore, the old adage "Quality over Quantity" should be your mantra when networking with HF professionals [or anyone else for that matter].

As always - questions, comments and dissenting opinions are not only welcomed, but encouraged.

Comments (11)

Oct 14, 2013

This sounds a lot like networking for any job? Oh wait, it is.

Oct 14, 2013

Yes, I did, however, try to highlight things I think are especially important to hedge fund networking. Truthfully, this kind of stuff should really be intuitive to a normal, well-adjusted adult.

One thing that I think is worth mentioning:

The point of my post was not to re-invent the wheel when it comes to networking, but to point out some aspects of networking that I think are discounted on this site. From my experience, the perception of those on this site when it comes to networking is, "As long as I talk to alumni, spit out some canned questions, and show I know how to model I'm in the clear." This may or may not be enough to get your resume passed on in banking, but it will not cut it on the buy side. On the buy side everyone is smart [objectively, but not all can apply it] and everyone knows how to model well. You have to go above and beyond that from the start to be successful when networking.

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Oct 14, 2013

Good post. I agree Simple As.

A Deep Networking should comes from the genuine desire to know the person. "Dale Carnegie".

A lot of posts here focused on "Whats is in for me" "Quantity over Quality". In fact, the most memorable networking I had came from people I knew well (over 3-5 meetups).

That is when the relationship is relaxed and comfortable for more social interactions branching and favours (e.g casual job request). Networking --> Friends.

Of course, this takes a lot of time and it's not recommended for Basic Networking where primary objective is to dig up or trade information. (e.g OCR, 2 hour session etc)

People are bias in nature. No matter how hard a heron pry a shut clam, it remains shut. That is what I've learnt. When people like you, getting the clam meat is much easier than canning out dozens of "get-back-to-me" cold mails.

In short, there's no right or wrong answer. Do whichever strategy that suits you and yields the best success.

Good thread.

Oct 14, 2013

You bring up a good point. Rarely, if ever, is there one correct answer to a question/situation. The answer to most things is usually, "It depends.".

Oct 14, 2013

I'm going to call BS on this post. Could have been taken off business insider, and there is nothing specific to the investing world. I mean, rule #1 is always have ideas ready (can be more or less thought out depending on the formality of the interaction) as it almost always comes up in one form or another.

Oct 14, 2013

I'm not sure about your experiences, but in mine networking in the investing world is strikingly similar to networking in any other industry. Like I said in my reply to Oreos above, my intent was not to re-invent the wheel when it comes to networking, but to highlight the level of thinking and preparedness that is necessary to be successful when attempting to network your way in to a HF.

You are correct, I didn't explicitly state that you should have an idea ready. However, I'd say that these two statements are pretty similar, no?

Simple As...:

The topic of the meeting will inevitably turn toward the markets or individual securities. You want to use this as an opportunity to show your knowledge, ability, and passion for the industry. Add insights about the market/securities and make the meeting a conversation among equals rather than firing canned questions one after another.

meabric:

I mean, rule #1 is always have ideas ready (can be more or less thought out depending on the formality of the interaction) as it almost always comes up in one form or another.

Once again, the point of my post was to highlight that the major difference between HF networking and other industries is the level of thinking it takes to make a good impression.

I'm interested to hear your insights about networking in the investing world if you'd like to share.

Oct 14, 2013

As OP said, "to make the cut" you need an undivided focus and demonstrate a passion for the industry.

Networking in the investing world for those already working gets done at conferences and forums, but beyond that people establish life long relationships quite often.

However, I agree that you "get to know someone" better in a casual social setting outside of work.

Oct 16, 2013
BatMasterson:

As OP said, "to make the cut" you need an undivided focus and demonstrate a passion for the industry.

Networking in the investing world for those already working gets done at conferences and forums, but beyond that people establish life long relationships quite often.

However, I agree that you "get to know someone" better in a casual social setting outside of work.

That line is blurred a lot. Simply because "talking about work" is sharing ideas as opposed to complaining about your boss (a la investment banking). Every time you do that, you give the other person more information about your ability to pick stocks (bonds, options trades, currency pairs, whatever), and people will remember if you were early to a thesis that became consensus a month or two later. Add that to the fact that funds prefer to hire via reference and you get an idea of how important networking well is. Plus, on the other side of the coin, you very well might pick up some ideas that ultimately make you money.

I think it differs from most client service businesses in that a lot of the networking there has the goal of opening the door to intros down the line, and thus often turns into a who do you know/where did you go to school/what type of work have you done circlejerk. Or straight sucking up depending on the dynamic.

Oct 16, 2013

Solid comment. Agreed.

Apr 2, 2015

Spot on Networking tactic. I've always approached this way and it has worked out quite well thus far. Located in a small mid-western city (think Omaha, Kansas City, Oklahoma City), I've set my sights on a growing, local hedge fund. Not many hedge funds here so I'm pretty laser focused on the one $200M AUM shop.

Timeline-to-date:
Early Fall 14: Breakfast w/PM
> Follow up: Shared my current stock portfolio holdings, excel models, and analysis write-ups
Late Fall 14: Light email about market events
Winter 15: Lunch w/PM & Analyst
> Follow up: Drinks w/Analyst a week later
Spring 15: Light email about a killer trade in his portfolio that hit its catalyst and other market events

The fund is at the stage where they will need to add to their team at some point. From what I've read, they're well overdue to do so. I'm trying to keep myself in play for the opportunity but I'm going to be pissed at myself for not doing more if I find out that they picked up a new Analyst.

"Don't ask for a job"..."If you make a good impression, the rest will take care of itself."

I have kept the line of communication open for a fair amount of time and now I feel that I need to open the conversation about a position. Any suggestions on how to go about doing that?

Make opportunities. Not excuses.

Apr 5, 2015
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