Q&A: BB IB-->Tiger HF
This forum has been helpful for me in the past as I made the jump into IB and HFs. I'll answer questions for an hour later this week if you queue them up here
This forum has been helpful for me in the past as I made the jump into IB and HFs. I'll answer questions for an hour later this week if you queue them up here
+50 | Jane street suing MLP | 33 | 8h | |
+43 | Investment principles | 11 | 5d | |
+28 | How to Know if HF L/S industry is for me? Wealth Management instead? Feel lost | 7 | 12h | |
+26 | Realistic HF Career Earnings | 22 | 1d | |
+25 | Top Long Only vs Small SM HF | 5 | 1h | |
+21 | Advice for Incoming Structured / Securitized Credit HF Analyst | 4 | 2h | |
+20 | How to move from prop to MM for quant? | 2 | 2d | |
+18 | Possible exits from BB role below | 1 | 6d | |
+18 | Analysts Launching Out of MM | 15 | 2h | |
+17 | $100m Hedge fund offer - what comp should I ask for? | 8 | 2d |
Career Resources
What skills do hedge funds look for? Is it hard to get a job at a hedge fund?
Yes it is quite difficult. At a junior level, I'd say analytical skills, culture fit, and passion for the game matter most.
Thanks for doing this. What was your recruiting process from the BB? How did you navigate conversations with HHs and prepare for interviews? Is there "on-cycle" for L/S HFs like Tiger Cubs or do you have to be ok with opportunistically waiting for the occasional hiring need throughout the analyst stint?
What is the typical background for analysts at your current fund?
Used the HHs. Best way to prepare for interviews is to start investing / researching companies 12 months beforehand. Come up with a few pitches so that's not a big to-do going in. There's no on-cycle, it's as needed hiring for most of the industry. Typical backgrounds are from other buyside shops or IB
How much does current valuation / actionability matter vs simply having a good pitch? i.e. if I have a name I wrote up 6 months ago, and the valuation ran away from me, did you use names like that, or were the names still relatively attractive on a valuation basis when you pitched them for interviews?
What is the competition like for these HFs compared to PE recruiting? Can you talk about your recruiting/networking experience and why you chose to go this path instead of PE?
Thanks for this.
If you use HHs, networking is less important. The competition is different than for PE. HF's are out of favor comparatively at the moment, but the bar for investing acumen is higher in interviews.
PE more transaction oriented (that's code for longer, more mundane hours)
Any advice for incoming analyst at a HF? Work, work-life balance, things you wish you had known, etc.
When you start, spend a lot of time up front learning the firm's style. Institutional knowledge is valuable
Does ug ranking matter?
No, but there's definitely a threshold GPA to break in
What's the threshold?
There’s not a GPA threshold, but it gets a lot harder the lower you go. I was 3.4 from a semi-target school and had a good background - I still got all the interviews but perhaps it was a deciding factor in some jobs I didn’t get. I definitely had to defensively explain it a lot
Thoughts on L/S industry and your long-term career plans?
Continue doing what I'm doing. You can outperform over a longer period of time if you're good at this
What’s your edge / what edge do you think you’re developing? What industry are you seeing dislocations? Tips for generating a sound variant view in a crowded space?
Thx.
tell us about the most typical activities you're doing on the job. my largest concern with HFs when I was thinking about this route is how much time is spent translating the revenue > cash flow lines from 10Ks and Qs to an excel format before getting to the analysis.
VS say in PE, where there is less granular info, so you can get to the meat of the evaluation fairly quickly. I've done PE but im less familiar with workstreams at a HF, correct me if im wrong...
You've got it backward for both. I spend very little time on unimportant excel work. In PE, there is more granular info and a lot of it is just noise
What's your comp?
Not discussing positions or comp
Any tips for the initial HH calls? Curious what types of questions they involved, how specific you were in terms of the type of fund
Fairly basic background calls; they might ask you about an idea too. Know your story and why you want to do HFs. Be very specific with the type of fund
On the spectrum of “go find and show us an idea” to having a formalized standard set of analyses / presentations, what has been your experience at the tiger fund? If you have the context, how does that compare with other hedge funds?
One of the big things I’ve noticed transitioning from IB to PE is that there is much less hand holding and you’re not necessarily structuring analyses in the same format over and over like in banking (pretty much every CIM was the same on a structural basis). With that said, there are some standard things we tend to include in all of our IC decks, but I’m curious if that’s also the case in the HF world, or if it’s really much more open ended on what you think is important to include in a pitch
Good question, there's much less hand holding than banking. Almost everyone struggles with this initially. So very similar in that regard.
The work varies depending on the idea you're considering. You need a broad tool box that you can reach into, depending on the circumstance. There are certain "essentials," (esp. when it comes to modeling) but that said, each firm/PM likes to see certain things in inv. proposals, so you have to feel that out
How would you rate your investment skills on day 1? Did you feel capable of legitimately adding an idea to the book entirely on your own or more like you could flesh out a thesis that was handed to you? If more of the former than the latter, how did you develop these skills beforehand? Alternatively, if you feel like you've grown in the role what have you learned and developed since being in the investing seat?
On the modeling side of things, how did your abilities from IB compare to the types of models that the fund uses on their positions? What were some of the biggest learning curves to tackle on a technical side?
How would you describe your allocation of time between modeling, reading Q's and K's, reading sell-side research, talking to company's, talking to expert networks etc.
What's the average duration of the investments in your fund? Did anything surprise you about how they executed on their investment philosophy? What do you think sets apart your fund from others?
Lastly, what do you feel are some of the bigger misconceptions about the role/industry for all of the people that "want" to get into hedge funds but don't really know much about them (watch too much Billions probably)?
I was competent coming in (could run with anything given to me), but came up the rest of the learning curve quickly. People will like you if you can add value day 1, though no one expects you to be an expert.
Every fund approaches modeling differently. IB prepared me well for my fund. The biggest learning curve isn't on the technical side of things. People that arent in the industry worry about that too much.
Research time is allocated differently depending on the idea. The basic public info is step 1 of every process.
We like to take a 2-3 year view. The quality of our research sets us apart. I didn't buy that argument coming in, but it's a real advantage.
Biggest misconception is that this is a get rich quick scheme. Public markets are brutally competitive and even on your best ideas, you're going to be wrong 40-50% of the time.
Thanks for the response! Just a couple other questions to run by you if you don't mind.
What do you think enables you guys to have better research? Smarter people? A greater willingness to commit money to research? A longer timeline letting you build theses over a greater period of time?
And I find it interesting that you say that people who aren't in the industry worry about the technical side too much, because every shop I've interviewed at/talked to seemed obsessed with it. Do you think that might come down to the differences of a tiger cub that gets to do the 2-3 year horizon vs the majority of funds chasing quarterly performance these days?
From my own research on LinkedIn (and anecdotally) it seems that most investment professionals at Tiger cubs and other top fundamental HF are generally recruited after IB and then 1-2 years at MF PE.
Obviously you were able to skip the PE step; would you say that most funds like (but don't require) PE experience? I have wondered if the prevalence of the 2+2 track is due to the early timing of PE recruiting; it seems possible that many top candidates are swept up early by PE and then decide to pursue HF after that.
Thanks for doing this, would love any insight you have. I'm very interested in L/S HF and about to start my summer in IB; would love to hear that PE isn't another necessary step.
That is the typical background. Depends on the shop on PE experience (system is what it is). I'd say any professional investing experience will do. If you're good, you're good. If you're not, that will be clear quickly.
PE not another necessary step. Frankly there are no necessary steps, including banking. Banking just makes it easier
Much appreciated. Do you mind if I send you a PM?
Do you think 2-3 years as a research associate in AM would prepare someone for HF as well as 2-3 years in IB?
Yes, but at the end of the day, people just care that you have the basic technicals and are a good culture fit, passionate, and an intelligent investor.
If people are really interested in what matters (investing acumen), subscribe to this thread. I'll think of a way to help the most people with the smallest time commitment on my end
[Addition after the initial post given feedback below]: Too many people worry about technical skills for way too long (that said, there's a certain base you do need to break in, FD). Investing acumen is a lifetime goal and will set you apart. Most bankers (that I know) don't think like shrewd investors because they don't have to. I've now gotten ~10 DMs about this point and ultimately won't be able to respond to everything. I consider my time valuable, as you should yours, and I'm trying to be efficient. This advice (and outlet) is free/open to view and, considering the below, may be more credible if there's some gating/paywall. Something I didn't consider before; behavioral economics is weird like that
Interested - thanks in advance
Also put a banana on this post. I cant see how many people subscribe to the thread
definitely interested
Hi thanks for your q&a.
Why did you choose the HF route over traditional long only asset management? Ignoring things like comp.
How are you dealing with the COVID-19 situation, what factors were implemented to reduce your risk and deal with the situation or did you sell and cut your position sizes as quickly as possible ?
If you could turn back time how would you hedge your portfolio against something like COVID-19
Thank you
Hard to ignore things like comp :)
Can't discuss too much about us (compliance, call me paranoid), but generally firms are and had been adjusting net and gross exposure to deal with COVID. Firms generally also cut exposure to COVID impacted businesses in March. This was a big shock to even the most experienced guys: some of the businesses we considered safest got hit like a bus. Some decisions to sell are even controversial today and I'm sure we'll be discussing the initial COVID response at our offsite.
If I could turn back the clock, I'd run the Bill Ackman trade. If you haven't read about it, you should.
Will answer anything else for the next 20...
this is probably a dumb question, but how common (if at all) is insider trading
Do you focus on the same industry group you covered in IB at your fund?
I do not. See the question below that's related
Looking to go into TMT HF after IB but currently work within Industrials, is lateralling a must? And if I do, where should I go? BB? EB? MM?
A lateral move is absolutely not a must. I know many people that started off in one IB coverage group and landed in another in both PE/HFs. However, the onus is on you to be well prepared for the interview / competitive. You can't walk in day 1 without a great understanding of the TMT vertical you're interested in and enthusiasm for the space. IMO, the whole "I can learn on the job" tale isn't convincing in the interview room, if you even make it there. I'd have something on your resume that connects the dots for the interviewers ahead of time.
If you do want to lateral, that's a different conversation and hard to answer your question. I'd prioritize best experience + name brand.
At your fund, what's the (approximate) percentage mix of people who went from BB IB, EB M&A, EB Rx, and PE?
Worked at a HF last summer and working this summer at GS/MS/EVR IB. Really interested in making the leap to HF. Two questions:
When did you start recruiting / interacting with HHs? From what I have heard anecdotally, it seems like it is more bespoke than PE recruiting, along with some IB analysts leaving for a HF before their two year stint was over at a bank. What did your process look like?
I have been doing my own research work since being sent home from college in March-- do you think there is any value in polishing up to submit to VIC and other similar sites? Not sure my work is up to par but doesn't seem like there is huge downside.
Thank you for doing this-- really helpful thread so far.
Thoughts on ER recruiting to HF, you seem to only really mention the IB route... does your firm not hire/consider hiring from SS ER?
Hi. Thanks for this. I have a few questions I'd really appreciate your input on: I am a 27 yr old Math/Finance student at european university. Previously I've been working in a small business(VP) in the consumer services industry. I quit my job for university at 26. So, I have work experience before pursuing a bachelor. At the time of graduation, I'll be 29/30 y/o and I would like to become A PM. I love research, investing and math. I like to understand the competitive dynamics, understand the needs of advertisers, understand user behavior. The ability to understand how the world economies are intertwined, thinking through what instruments will be impacted, and the complexity of keeping it all together is a great problem to be solving. Also, I love to investigate Datas like a Detective to get the answer of the question. I've done some value investing of my own. I want to get into it, and I'm a quick learner. After graduating I am planning to apply for a target Master in Finance or math. Do you think it's possible to break into HF? Am I too old? What would be the best way to break into the field?
Thanks for your note. FD I'm not familiar with many European funds, so there might be a difference from the US. As promised, here are my thoughts.
You're definitely not “too old,” but I don't think a masters in finance or math will help you break in. You're better off spending your time on the side in self-study mode + networking. I think you have a few options post-graduation: sell-side, AM, try to backdoor your way into a HF, or go corporate. Yes that's everything and the kitchen sink, but that's also my point. It really doesn't matter what you do as long as you get good experience (can craft a story) and can self-study on the side (the later note goes for pretty much every job outside of the role itself, including ER). Ultimately you'll need to get smart on what matters (valuation, business analysis, etc.) and get to know people in the HF community.
If you haven't read Damodaran's online class notes on valuation, start there and finish them within a few weeks. If you DM me after, I'll give you what I'd consider to be a good next step.
Cheers all. This is the last from me on this thread. Best of luck to everyone. Still thinking of a way I can help in a scalable way. Subscribe to the channel / banana the post if you're still interested and sorry if my answers bored you ;) Stick with an index fund
Thanks for doing this
Why did you choose HF over PE?
What is your strategy? L/ S equity?
Hey - I recently jumped to a Tiger cub as well after a stint in banking. Definitely have struggled at first with being more productive / self-guided. Wanted to ask for some best practices / things you found useful as you started ramping up (e.g. one of the things I’m planning on doing is hopping on the phone with other analysts to learn more about their processes) Thanks for doing this!
Which Tiger cubs take people with only 1-2 years of experience (either in banking or PE)? Ik Tiger Global, for instance, takes mainly people who've done the traditional BB/EB -> MF route, but no analysts there come directly from their banking gig.
It would be great to get a comprehensive list, or just a few examples you came across in your recruiting process. Thanks!
The best thing for you to do is talk to a recruiter about who's currently looking. Industry is very ad-hoc
What criticisms do you have of tiger cub funds investing style and performance? Are they generally better at taking long than short positions? How good are their returns, do they match up to their reps?
Hard to give criticism that general, but the one thing that does come to mind is that time horizons are too short even if people advertise otherwise. The other parts of your question depend on the firm.
can you share typical investing style of tiger cubs? From what I know they invest 2-5 years long term fundamental based analysis and they avoid cyclical sectors such as semiconductor and commodities. Would you say there is anything more in addition to these?
Do you see people with MM IB / LMM PE backgrounds in HFs? The vast majority of people I've seen in the industry are from BB and MF shops. I'm wondering if it's even worth it for me to spend the time trying to break in from LMM PE.
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