Single vs. multi-managers

Hi everyone - would be great to get an update on how one would consider the opportunity at the more traditional L/S managers vs. the larger platforms. The forum has articulated well the pros/cons in the past (e.g. longer horizon and stability and the SMs vs. more transparency of PNL and faster promotion to PM at the MMs), but seems like there has been a shift of talent and capital to the MMs over the past few years. For someone looking to move to the public markets, any updates on those pros and cons and whether the relative attractiveness of career, comp, trajectory has changed between those two?

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Comments (11)

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Jul 23, 2020 - 5:38pm

Single Manager Pros
- More job stability
- Potentially greater salary
- Longer-term investment time horizon, but depends on the firm's/PM's investment style
- Better work / life balance (of course depends on the firm)
- Less stress in general

Single Manager Cons
- Less access to sellside research
- Less pay during good years
- No brand name

Multi-Manager Pros
- Amazing access to research, management teams and conferences
- Well known brand name firm
- High payouts during good years
- Develop good relationships with execs/IR at company's you cover
- Can become a PM / manage a book very quicky if you perform well

Multi-Manager Cons
- Little job security (have a bad year and whole team can get let go)
- Market neutral model (debatable whether a con, but depends on your investment philosphy)
- Investment style becomes very repetitive
- Short term, quarterly investment style
- Very stressful, earnings seasons are brutal

Here are some more resources about multi-managers from my perspective:
- The Basics of Working at a MM HF
- Life at a MM HF

Jul 24, 2020 - 9:37am

End of day people do MM for $ plus control at PM level. At analyst level, probably $ and path to a carveout or book.

The other points a mixed bag... Brand not a blanket advantage for MM in terms of personal reputation building bc 12 different books in your sector all being run differently with diffferent quality process etc. Having been analyst at Citadel/Sac by itself doesn't say much. And because there are 12 industrials books or whatever being 'the industrials PM at Citadel' doesn't mean something to a company the way being 'the industrials PM' at viking does. Having been Plotkin's analyst at Sac or jack woodruff's at surveyor does say a lot, but unless working for one of few famous PMs or becoming one, brand of large SM tells you more, good or bad.

Sellside access and management relationships similarly mixed bag. Any resource that is just $, the big MM will index well. But because of team stacking, corporate and analyst access for any given book worse than a big SM. Will bank get your platform some meeting with every company at every conference because you pay so much? 100%. Will it be 'the Hf meeting' where it's all MM guys and your platform has two or three seats (and p72 has 2, and baly has 1, etc) so you have to get notes internally if you don't have one of two biggest books in sector? Yes.

Jul 23, 2020 - 8:41pm

Pretty much summed it up.

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

Jul 23, 2020 - 8:43pm

What Buysidehustle said.

I would suggest you figure out quickly what your investment style is. There is no right or wrong answer - more about knowing what you get yourself into.

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

Jul 23, 2020 - 9:47pm

Exactly. Most people out of banking or PE focus too much on prestige and brand name. The most important thing at a hedge fund is investment style. If you don't believe in it or identify with the style, you will be miserable and won't be successful.

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Jul 23, 2020 - 9:56pm

It's hard to have a "style" when you have not practitioned professionaly. You have no clue what the menu of styles are, the asset classes, nor the tools required to pursue a style. Asking a 24 year old kid to determine his style is stupid. Go work for someone you admire that has a good track record. Whether he trades long/short, buy and hold, or whatever, what matters is learning from someone good early in your career. You can then start to adjust and develop your own style.

Jul 24, 2020 - 8:48am

I agree with OP that the multi-managers have become less relatively unattractive as they've gained assets, as alt data has grown in importance and as there has been some better talent going there. As someone who's been at both and recently moved back to single manager, I'd pick single manager every time - the longer time horizon allows me to do deeper research, take bigger bets and I think a generalist model is more attractive and better for my career than the narrow focus required at junior levels at MMs. MMs are probably better products for the their LPs but for an analyst I like SMs and the historical reasons people prefer SMs are still largely true. Most important thing though is to be on a winning team in either model - otherwise you're gonna have a bad time

  • Analyst 3+ in HF - EquityHedge
Jul 24, 2020 - 9:13am

yes, last point most important.

However, very hard to size up if a team is 'winning' as when they are hiring it may be they are new or had a recent hot hand and did well. Hard to predict if they can replicate.

Jul 24, 2020 - 9:13am

Agree, love being a generalist and having a longer-term time horizon. It gets extremely repetitive covering the same 40-60 names at a MM and at some point you just stop learning.

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