Q&amp;A: ex-McKinsey EM and current L/S hedge fund analyst

The transition was relatively smooth and this was in huge part thanks to the folks I work with in the HF. The fund that I work in is not a MM pod where the primary focus is QoQ EPS and 100% market neutral structure. This leads to heavy performance pressure on a daily basis and teams have huge turnover rate.

I work with a fund where the folks are super supportive, we have a committed LP base, a strong HF brand recognition, and it is a single manager HC fund within a larger HF. All this makes life good and culture strongly different to other HFs that I have seen.

Cmpared to consulting firms, HFs are vastly different on culture. Consulting firms it is all about giving recommendations and not owning the outcomes, till you become partner (maybe). Here, you live and die by your words and there is an extreme sense of ownership.

Authored by: Certified Hedge Fund Professional - Investment AnalystCertified Hedge Fund Pro

I moved from consulting to buyside HF and not PE. I did interview with a few PE firms while I was thinking of this transition but ended up giving up on that option as most PE firms considered my skillset great for their operational team but not for their investing team. I did not want to do "consulting" at a PE firm, which is pretty much what operational teams in PE do

Authored by: Certified Hedge Fund Professional - Investment AnalystCertified Hedge Fund Pro

NoEquityResearch

Funniest

Typcial of PE teams.....they don't want people who actually know how their industry works and operates.....that would ruin a time-honored tradition.

NotAClimber

I keep hearing about how consultants are routinely bashed as being "less quantitative," "softer," etc. than iBankers and other finance-heavy career folks.

What was your way of refuting those preconceptions, or demonstrating your technical chops? What sort of prep did you do before deciding to transition?

Do you think any of that would that change for me (an Associate at a T2 firm)?

Array

Consultants are used to 30k foot thinking and are recommended not to boil the ocean. In HFs, the devil is in the details and you need to think of every single aspect of a problem to ensure you are not fooling yourself. It is generally true that consultants don't necessarily make great investors, as the skill sets are different. But, a few things translate:

Your ability to read management teams and understand how they think and speak is really healpful in HFs, as you do dilligence
Your creative problem solving approach helps - basically your ability to collect all sorts of information and drive towards a data-backed conclusion is key
adaptability - you are really good to modifying your approach to solve problems based on your situation in consulting. think of each investment as a new case

What doesnt help much is - lack of detail orientation, team focus (HF is all about you and your performance in the long run), and lack of need for lipstick on a pig (no need to dress up anything in HF - it is all about the truth)

In terms of prep, I did a lot of strategy and corporate finance in McKinsey, which helped a lot naturally. I did not preparestock pitches or ideas. That is more relevant for MBA to HF transition, not MBB to HF transition. I am generally very sharp with numbers and came with a lot of detailed technical background - PhD and postdoc in Biology

Authored by: Certified Hedge Fund Professional - Investment AnalystCertified Hedge Fund Pro

Most Helpful

One thing I was particular about throughout my career was not to restrict myself to a particular industry or career path because I had initially committed to it by choosing a particular education or initial job.

I completed my undergrad in engineering but go excited by basic biomedicine mid-way through my undergrad, so systematically started shifting my education career towards it. To that end, I completed 2 internships, in 2 name brand universities so that people take me seriously when I applied to biomedicine programs for my grad studies vs engineering. This helped land a grad biology program in one of the best universities in the world. The first internship was extremely hard to get, since no one took me seriously. I reached out to 100s of labs and 10 responded, and 1 offered a position for an internship. Second internship, I applied only to 2 and got my top choice since I had a recommendation from 1st internship.

While finishing my grad studies, I was clear that I did not want to get into academia. So I started looking into every single non-academic position I could get into. I literally googled academia to non-academia and came up with every single option possible. I landed with MBB because I realized it is a career accelerant and would open all sorts of doors post a few years there. I have to admit here that my brand name grad school ensured that people in MBB recruiting took me seriously and at least gave me an interview. The success here was driven by sheer hard work to crack consulting interviews and also importantly, having a clear idea of what consulting folks wanted. So prep here was long, since I did not do my MBA but clearly found a path to get to join MBB at the same level as MBA folks. By doing so, I got offers from M and B, and I decided to join McKinsey.

At mcKinsey, it was clear I didnt want to be a partner at the firm and after a few years in the firm started looking a all sorts of opportunities. The HF opportunity was luck driven to know about the role but then sheer hardwork to convert the opportunity to a true offer

So, overall, if you ask the keys to success: 1. Work extremely hard and constantly keep your antenna up and look for opportunities 2. Seek brand name institutions on your CV. I know it might be considered a shitty advice but I have found again and again people use these brand names as flters, even though they do not admit to doing so 3. Read, read, read and become as world wise as possible - you knowledge of the world is going to help you know of the opportunity set out in the world for you 4. Never believe you cannot do anything - dont let people tell you that you cant get something - look at folks around you, I am sure you will find 10 examples at least of folks having done things that are deemed imporssible. Work hard and anything is possible

Authored by: Certified Hedge Fund Professional - Investment AnalystCertified Hedge Fund Pro

HF vs PE I understood quite early in the process that if I wanted to get into PE, then I should be ok to settle with an operational role vs buy side. Further, a PE role involved all the same issues that consulting had for me - travel, fixing companies, crazy time deadlines without 2 critical difference - financial upside and owning your recommendations. Further, I didn't see myself 10 years later starting my own PE firm, so I decided not to pursue this route.

HF on the other hand was very attractive. The market is the market is the market - it is very objective and winners and losers are decided based on the exact same metric. The market doesn't favor the powerful, it doesn't favor the rich, it doesn't favor track record, it doesn't favor brands - it treats people equally, which was very attractive. In the future, I can leave the HF and create a phenomenal family office without 0 infrastructure consideration, which I love. I could be location independent and stand up my own firm or office when I wanted to do it. Thirdly, network has limited effect on overall success. You don't need a brand name like a16z or djf to succesd in HF like VCs or TPG or Blackrock in PE. In fact, the most successful HFs fly under the radar, which suits my personality and character a lot. I am not flashy, I dont care about press coverage or fame.

Authored by: Certified Hedge Fund Professional - Investment AnalystCertified Hedge Fund Pro

L/S fund wins hands down

Let me give you an idea here:

McKinsey: Analyst: 100k all in (0-2 years on the job) Associate: 200-250k all in (2-4 years) EM: 350-400k all in (4-6 years) AP: 650-800k all in (6-8/9 years) Partner: 1-2m all in (8/9 - 12/13 years) Senior partner: 3-5M all in (13 years+)

Fund - please keep in mind a successful on: Analyst: 500k-1m (0-5 years) Junior PM: 1-5m (5-7 years) PM: sky is the limit

Layer on top crazy travel, being the client’s bitch, unhealthy life style, and constant people pleasing - it is quite clear to me which profession is financially attractive while providing a manageable life style.