I think most would say its a small amount worse than GE/Surveyor in terms of reputation. Comp and hours are going to be 100% based on the team so you need to provide a bit more info here.

 

In a market neutral framework, which is where the industry is going (including SMs), sector matters less as long as you are an expert in your chosen sector. I would imagine insurance is rather unique/difficult sector to learn and a factor neutral return with a decent sharpe in that industry could get payouts nearing 25%+ at a lot of funds. You dont wanna be in energy which has had huge secular declines but as long as you think the sector will exist in size in the future and enjoy it, its fine.

 

This, basically.  Sms think about risk on $ so you want a sector with largest unlevered moves and dispersion. Banks and insurance are tough in SM most of the time because there’s low dispersion (so is RE, utes, etc.) and drivers of subsector moves aren’t repeatably predictable (rates, macro) so hard to just make a big sector bet.  Mms think about risk on vol, and force keeping subectors pretty tight, so having a lot of stocks that trade together should actually make portfolio construction easier, you can’t make sector bets anyway in those models (other than p72 to some degree) so lower dispersion just means you run more gross.

 

MMPM

Terrible take. He's joining Ashler/Citadel, so he will be buying insurance longs against insurance shorts. Definitely a business model that works, pretty much in any sector.

Really? And how marketable is he as an insurance analyst outside of the MM space?

If you’re managing your career properly in the early years, you should make sure there substantial demand for whatever skills/specialization you’re developing.

HF skills (ie stock picking) are among the least transferable skills, so you’re already locked into a field with a not very compelling secular backdrop and not much lateral mobility into other career tracks. Now your going one level down, and limiting yourself further to a sector specialization that really only works at a 4 firms?

Unless you are deeply passionate about insurance, AND feel like you have a real differentiation in attacking that space, you’re setting yourself up to be dramatically pigeonholed for the remainder of your career.

For a more senior guy that got into the industry when it was much less mature and had an insurance specialization when there was still real money to be made there (across strategies not just at the 4 MMs that matter), I’m sure it’s a fine track stay the course — what other choice would they have, anyway.

For a 25 year old, I don’t know why you would choose that path with a blank sheet of paper standing in 2021 with all the alternative paths open to you. Again, unless he has some deeply rooted reason for wanting to do insurance. Something other than that’s where he got placed when he entered investment banking.

 

Don't move the goal posts. You said there's no money to be made investing in the space. That's BS, period.

Second, you join a Citadel team, you will initially cover insurance. But you're going to be very exposed to the rest of the team that trades financials broadly. You'll learn about banks, asset managers, payments etc. It sets you up well to eventually become a financials PM.

 
Most Helpful

MMPM

Don't move the goal posts. You said there's no money to be made investing in the space. That's BS, period.

Second, you join a Citadel team, you will initially cover insurance. But you're going to be very exposed to the rest of the team that trades financials broadly. You'll learn about banks, asset managers, payments etc. It sets you up well to eventually become a financials PM.

You can also make money selling scrap metal in Lithuanian, that doesn’t mean I’d tell a Wharton educated, investment banking analyst/PE associate that’s how to best monetize their career potential.

You seem to have this foregone conclusion that the only place to go is a MM HF. The point I’m making is that’s a tough way to make a living (no shit), and he’s not making it any easier by choosing a sector focus that takes almost every other non-MM opportunity off the table in the future.

As usual on WSO, if it’s not young uninformed monkeys piping up, it’s older seasoned veterans talking their own book and advising others that the path they took 15 years ago still alive and well for a new entrant — whether it still is or not.

Financials. Are. Dead.

Maybe they weren’t when you got into the game 15 years ago, and so you got to a good seat and made a bunch of money along the way, but that’s no longer the case. How many sub-35 year old fins HF guys do you know crushing it and launching their own fund? If it’s such a good way to eek out tons of alpha, where are all the star fins PMs? Why is every single hugely successful launch coming out of the MM HFs in consumer and from SM is focused on tech? Where are all the fins HF billionaires and centi-millionaires? You know where they are? They’re in 2005.

Insurance and banks are macro bets on rates and credit cycle.

There’s 3 types of people that work at MM, unless you fall into bucket 1, don’t touch Ashler with a 10 foot pole.

1- hardcore stock jockeys who live and breath that style of stock picking. It’s all about understanding what makes a stock work (less about fundamentals/biz quality etc, except as it relates to understanding how those features will drive behavior with respect to that stock), it’s about what’s going to make people buy/sell a stock or variety of stocks, having a pulse on every corner of the market, being an inch deep mile wide so you have that tactile feel for the market and don’t have any blind spots, constantly trying to find any vector of attack/differentiation on a security, very short cycle high velocity theses, it’s all you ever talk about and think about and it’s all you ever want to talk about or think about. If that’s not you, if that’s not the level you’re going to play the game at, then you will get murdered. You may very well still get chopped up, but without the above it’s a forgone conclusion.

2- kids who wandered into the space not realizing exactly what it is. They heard anecdotes about how much money hou can make, they know Citadel and Pt 72 are bold faced names in the HF biz, and you ‘can’t go wrong’ by going to the well known tried and tested — except you can. 

3- others who got into the HF game to do non-MM style investing (ie market and factor neutral stock picking), have been chopped up and spit out by the secular carnage outside the MM HF space, and just need a seat to sit in to pay the rent; this is a bad spot to be in, but by virtue of the MM model/turnover, they can keep a seat warm for 1-2 years.

My overall Advice to junior ppl is that unless you’re super convicted in what you want to do and have been for multiple years, maximize optionality/future marketability. If you don’t fall into category 1 above, stay away from MM HF. Even if you change your mind later on, it’s always there, and they are always hiring.

 

If anything something like insurance, banks, autos, etc. can be a good coverage to have at a MM. The lack of huge dispersion in returns across names makes it harder to make a killing, but also harder to blow up, which is a constant concern at these types of places.

 

Ut corporis neque maiores eaque vitae. Blanditiis quod consequuntur maxime assumenda molestiae ut et. Itaque qui est incidunt repellat corporis aut et.

Career Advancement Opportunities

March 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Magnetar Capital 96.8%
  • Citadel Investment Group 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

March 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

March 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Citadel Investment Group 95.8%
  • Magnetar Capital 94.8%

Total Avg Compensation

March 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (71) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (225) $179
  • Intern/Summer Associate (22) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (249) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”