Hedge Fund "startups"
I live in Chicago and have been trying to find some kind of trading job for a while now, but let's just say I'm pretty under-qualified and most places don't even bother to formally reject me. My simulated portfolio would be pretty impressive if it was real money (trade primarily equity options and up 31% ytd). But I know that means nothing since it's not real. My mentor - a former market maker/arbitrageur - could give me a killer reference, but he's old and worked in Germany, so his connections are pretty much dried up at this point.
I'm looking for some small time hedge funds or trading firms that would be willing to take on a rookie with nothing but a non-finance degree and a passion for trading. I have a background in coding and would be willing to do whatever was needed. I don't even need to get paid; I just want to get my foot in the door and something tangible to put on my resume. Where can I find info on small-time, "startup" funds? Most lists I've found just include the top hedge funds in the area, which is exactly the opposite of what I need, as they are too competitive for me to find a job at. I don't care if it's out of a garage and 2 employees, so long as they have some capital. I need to find a place that will give me a shot.
Does anyone know of a comprehensive list that would include places like I described? Any ideas/advice is appreciated.
Hedge Fund Start-Up's (Originally Posted: 02/10/2011)
Is there a good list or site that anyone can share a link too that has the latest hedge fund start -up's with a few details about the fund (strategy, location, aum)? I would like to reach out to some of the smaller, newer shops out there for a non-traditional internship. I think it could be more exciting and I could learn a lot more working in a smaller, less corporate environment with fewer people, rather than a large operation like DE Shaw etc..
Subscribe to Finalternatives and just read up on HedgeTracker. They usually announce daily of new funds opening up.
Those are good options though they will mostly capture funds over a certain "threshold" of size or publicity, not any micro-funds as much. Not sure if you're interested in those anyway but wanted to point that out.
Startup HFs (Originally Posted: 05/13/2007)
What is it like working for an HF in startup mode. Essentially, I would be an analyst for the portfolio manager. I would be the second employee and was wondering how a year or 2 at a brand new fund would be perceived by other, larger HFs, other buy side firms and perhaps sell side. I eventually would want to get into equity research at a large sell side firm and thought that this might be a good stepping stone...thoughts?
Just getting done with an MBA business schools">M7 B-school, and the money is going to be quite low (hopefully just for the 1st year). Granted I have no buy side experience, and also this is a fund of hedge funds, but the beginning will be painful. I think it will depend on how big your fund will be to get started with. Mine is tiny, but if your's is bigger, you stand a better chance at getting more money off the bat.
It'll be very difficult. May not even get positive returns. All in all, depends on the skill of your portfolio manager/equity research/trading team. I'm assuming this is a three man tabletop operation?
I was told it would be myself and the portfolio manager, with 4 "limited partners" who had no day to day role in the fund.
I worked at at start-up (employee 3) for 4-years. Best experience ever. I did NOT make bank -- but learned a lot.
Hedge Fund Startup (Originally Posted: 06/27/2013)
This may be a ridiculous question, but could someone who is not in the finance world at all do anything with 250k in terms of starting a hedge fund? The play would obviously include backing/partnering a young trader with a good record.
wat
It's barely enough (and possibly not enough) to cover the start-up costs associated with forming a hedge fund (setting up legal entities, paying for outside custodians/auditors, etc) assuming you want to do everything right, let alone do that AND pay for office space and other "necessities" (Bloomberg subscriptions, etc), and all that is before we even talk about actually having capital to invest.
There are some other options if the goal is to establish a track record-for example you could give your partner discretion over the account and market with that, or you could look into setting up a CTA (somewhat cheaper legal and admin costs vs a true hedge fund).
http://luminainvestments.com/
What are the odds that any of those kids lurk or post on here and have been forced to endure the running joke that their business/lives have become?
If you're asking this question, you aren't ready to start a hedge fund
How so? It appears OP wants to start a small trading operation, not a hedge fund.
Market outlook on there is golden
you can start an hf if you can get accredited investors to give you money. you must convince them, not us or yourself. by 'partnering' with someone that you give money to b/c you can't do it yourself is akin to starting an engine rebuild shop and hiring expensive techs to rebuild for you while you add absolutely no value other than funding the shop.
fyi, any 'fund' set up as an llc is fucking histerical
Agreed.
lol 'privately owned hf' as opposed to publicly owned??? Also how do you get a series 65 and no series 7? no one there has a 24 or 27 etc, and i would love to know how much assets under management they have...assuming not from mommy/daddy etc. also great work experience at bloomberg for a month and ray jay for a year, i'd give him my millions:
06/2011 - Present LUMINA INVESTMENTS, LLC WILMINGTON, NC 09/2010 - 08/2011 UNIVERSITY OF NORTH CAROLINA WILMINGTON WILMINGTON, NC 07/2010 - 08/2010 BLOOMBERG, LP NEW YORK, NY 07/2009 - 06/2010 RAYMOND JAMES WILMINGTON, NC 07/2009 - 06/2010 UNIVERSITY OF NORTH CAROLINA WILMINGTON WILMINGTON, NC 09/2008 - 06/2009 PROVIDENCE HIGH SCHOOL CHARLOTTE, NC 07/2008 - 08/2008 CENTRAL PIEDMONT COMMUNITY COLLEGE CHARLOTTE, NC 09/2007 - 06/2008 PROVIDENCE HIGH SCHOOL CHARLOTTE, NC 07/2007 - 08/2007 NOODLES & COMPANY CHARLOTTE, NC 09/2006 - 06/2007 PROVIDENCE HIGH SCHOOL CHARLOTTE, NC 07/2006 - 08/2006 BINFORD'S LAWN CARE CHARLOTTE, NC 09/2005 - 06/2006 PROVIDENCE HIGHT SCHOOL CHARLOTTE, NC 07/2005 - 08/2005 BINFORD'S LAWN CARE CHARLOTTE, NC 09/2001 - 06/2005 OLD LYME SCHOOL SYSTEM OLD LYNE, CT
.
SB for you! This is the funniest thing I've ever seen.
The quotes on each of the "managing partners" page are awesome. When the hell did these kids graduate?
I tried subscribing to their mailing list for "Macroeconomic analysis," but apparently the site is no longer active.
Related to Lumina, anyone heard of Gulf Capital Mgmt?
Maybe this is what you mean, but most newer funds and a good number of older ones structure their management entity as an LLC... the literal fund itself is typically an LP, so I'm assuming that's what you meant by that being an LLC is retarded, but as the GP the smartest thing to do is to cover that unlimited liability by making the GP and LLC all the while capturing the additional benefits of being an LLC. So that's usually the best way to go. Then feeder fund offshore into a master fund for international investors... but yeah I'd say most management companies are LLCs.
Nice to meet you.
Damn, you had to out me like that?
Yeah blackhat is right. you guys should use google more often
Seriously. If you understand what the different designations are for, it's perfectly logical that they'd need a 65 (which allows you to be registered rep/provide investment advice) and not a 7. Also, as you point out, they (presumably) don't have a FINRA-member broker/dealer entity (why would they?) and therefore can't sponsor themselves for the Series 7 (unlike the 65 which I'm pretty sure you don't need to be sponsored/employed by a FINRA member to take).
This isn't to say these kids aren't complete and utter jabronis, by the way.
Also, there ARE publicly-listed hedge fund management companies.
Just spit my coffee everywhere
Startup Fund (Originally Posted: 03/16/2013)
Hi, I am a new PhD graduate. After failing on landing a position at a BB or a top HF, now I have an unusual offer from a startup hedge fund. The fund literally starts from ground zero with no trading record, but it already has an initial investment from a family office. The position is unpaid now but with potential equity shares of the fund (5~10%). The founder has extensive investment banking background, but zero in proprietary trading.
Any suggestions?
Get the equity stake in writing.
You have a PhD. As stated above. You don't want to be in a position where things are going well & they pull the rug out from under you. Also, get as much as possible early on. No everyone who says "potential for more" means it. What one gets on signing is usually what they end up with.
family office hookup = success usually. become friends with said family.
what was your phd in? how much debt do you have? how long can you work unpaid? what would you be doing there?
founder having extensive IB experience but no trading is not necessarily a dealbreaker but definitely a flag unless he has good people under him. working unpaid is going to paint you as a slave in their eyes so unless that equity plays out, you're not going to have much upside from there.
Thanks for the replies. Really appreciate all the valuable inputs.
I have a PhD in statistics and a master in CS. No debt but no income now. I have some saving from my previous part-time job (at an asset management firm) while I was in school, so I would say I can work unpaid for one year. But I guess the next question will be, how long does it take for a startup fund to fully operate? Or what's the percentage of succeeding? The founder said he has "friends" who can help, but it was a bit vague to me.
I am seriously considering about the job because it offers me a chance to get involved with the core business of a HF including strategy design and portfolio management which I love doing it. Also I have the opportunity to lead a group of 3~5 interns. I also feel comfortable talking with the founder, so it seems that we could get along.
How big is the initial investment? Where else can this guy get other investors? Nobody will be calling you guys to ask if they can invest. You need to know what the marketing plan is before you accept. By marketing plan, I mean who exactly is he going to call to get money from. If this guy gives you a bunch of names of pension managers (as just one example), then forget it. Investors like that won't invest with a start-up firm with a manager that has no track record. At a minimum, you would need a three year track record with $100 million in assets before most institutional consultants will even look at you. The ideal would be a bunch of family offices and/or generic rich people to start off with. This answer might be different if he had a track record elsewhere and was spinning out.
Also, you haven't mentioned the strategy an if you think this guy has any sort of edge. You have to be a true believer in a situation like this. You should be both drinking and serving the kool-aid.
SirTradsaLot, very nice point on the marketing plan. I will certainly do more research on this part.
The investment process is "quantamental" for equity long-short
If he's legit I recommend you take the position, have an attorney go over the contract between you and the firm and build something from ground up. Not only it's a great experience as you might never get another opportunity to be involved in the start up stages of hedge funds, but it will provide you with insight knowledge of how the industry is structured. What do you got to loose? An experience earned is a solution gained in the future. Enjoy
I would be very, very skeptical of 1) an unpaid position in this stage of your career and 2) the lack of pedigree of the founder. The obvious challenge on the latter is that without a successful investing background it will be challenging to know whether he's any good at it. Even Jordan spent time in the farm system before "making it" to the majors where he subsequently washed out. And I assume this guy's no Jordan.
I would also be skeptical of a guy with a banking background only trying to come in and start a hedge fund with no prior trading history or HF experience. I just started up after almost 4 years on the buy side and running a portfolio for 2 of those years and even with a great track record it's still a daunting, daunting task to come in and try to raise new capital, manage the business and the P&L everyday, etc..
Also I have an intern working for me who I pay and he only has an undergrad degree...I wouldn't even think about asking a PHD to work unpaid. The only way you take the offer is if you are somehow convinced that this guy is an absolute genius, but even then...there are a lot of smart guys on the street who have been doing this for awhile with more resources than this startup, and it is still not an easy gig for us!
Also make sure that you have clear performance milestones in your contract that say when you will actually start getting paid, and how much. Make sure that whoever else works at this firm has been there and done that with regards to forming a fund, developing a thesis, portfolio mgmt, etc. or else you will be in for a long, painful learning curve.
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