Thoughts on Lateraling to HF from Private Credit
Currently work at a MF private credit fund. Our firm is known for its non sponsor work as well as its ability to dig deep on diligence + docs. Associates do the heavy lifting on the diligence along with VPs and very rarely lean on 3rd party work (unless run of the mill sponsor process). I like the work of analyzing companies and making the investment decision; however, I don’t really like the process work, nor do I want to continue down the path of credit due to concave nature of returns and focus mostly on downside. All I see at higher levels and positions is more of the same. Would love optionality as to where can best invest in the cap stack. Public markets have always excited me and really want to push to that world.
I want to make the transition to L/S equity; however, I do recognize I have a challenging background for the transition (combined with fact I’ve been a generalist). I’ve done two years in IB (LevFin) plus ~1.5 years on the PC side.
Any thoughts or advice on how to best position or prepare myself for the recruiting process? My goal is to find a fund with a spot where I can learn as much as possible (and would prefer to pursue a generalist role vs sector but am not terribly picky). As additional color, I do also have an advanced degree in computer engineering as well (although I wouldn’t want to work in a solely quant role).
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I did the reverse of you by switching from HF to private markets (spec sits credit / PE) and have some friends who made the private to public market switch. The biggest thing you can do now to prepare yourself and help land interviews is by start generating public ideas that you can pitch. Unlike privates, there is no VDR and everything is available to you (generally) via SEC filings and investor relations page. Anything you'd need for an interview setting at least. Some find it difficult to gain conviction in an idea when you're playing with less than 100% of the information available, but thats part of the game and a large part of public market investing is cutting through the noise to the one or two things that will drive the equity / credit. If you are looking for cross capital structure type firms I'd suggest looking at public credit firms as opposed to long / short equity as its mainly the credit guys which have most cap structure flexibility.
Curious why did you make the reverse switch? In private deals, I’m finding myself coming to a thesis and then having more senior people add additional analyses that basically say the exact same thing to fill out a 100 page deck. I think it’s well worth diligencing ideas but my current firm just beats the heck out of ideas. That’s the part that really frustrates me
I found a small group that was pretty good at a certain niche and was able to come in at the sr assoc level, with only one layer between myself and IC, where my work is almost always the "final" product subject to some nits or different ways to cut the analysis, but I don't really find it to be iterative or a waste of time. I also get pretty in the weeds with drafting term sheets and other legal docs and discussing with counterparties which I enjoy. So, it was a substantial jump in responsibility for me which I was mainly looking for. The HF I was at frequently traded stressed / distressed names but only rarely in large enough size to be on a steerco or have a voice in RX matters, and I didnt like hitching my horse to someone elses wagon. At my current role I enjoy dealing directly with the company and their advisors as the sole lender / stalking horse / whatever were doing, it is nice being the master of your destiny. Plus, we have mandate flexibility to trade public situations on the occasion something very compelling comes up. It has made me gain a new appreciation for what a truly compelling public trade it when I can weigh it against private opportunities. It is also interesting to look at a public company and think of an illiquid / private financing solution that might be value add, and i've noticed my background in publics has been helpful in identifying some of these a little quicker.
To your point, I don't think I would be happy at a MF/UMM fund for the reasons you allude to.
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