What would you do?

Hey all - 

Have a situation. Currently work at a start-up HF as a PM where I have complete investment discretion. Long story short, it's not working out. ~8 years experience in Finance including half of that on the buy-side.

I have two possibilities on the table:

  1. Go to work for a friend of mine who owns/runs a ~$400mm Family Office - he's offered me a base in the $200s and 30% of profits to begin with. He'll seed me with $5mm.
  1. Go to work for a well known multi-billion dollar fund (not a traditional MM) where I'll have a PM title and be able to run a book. Base likely in the $200s, bonus is discretionary.

What would you do and why?

Comments (5)

Most Helpful
  • Investment Manager in HF - Other
Dec 6, 2021 - 8:56am

From my perspective:

1) I wouldn't work for a friend. I've rarely seen business and friendships mix well. Sounds like a cool opportunity, but that would immediately be a nonstarter for me. 
2) where are you in your career? A big brand name can carry some weight, and it looks like you'll have investment discretion at either, so if you want to strengthen your resume, I would probably go with the bigger name

3) how are the risk limits at the MM? The one thing that would turn me away from choosing the larger fund is politics and risk limits. If you have extremely tight risk limits and don't think you'll be able to run your strategy then that's obviously an issue. Looks like you are at a big fund now, so what about that isn't working? I would be concerned that whatever isn't working now won't work in the new place. 

The biggest thing for me would be understanding why your current place isn't working and what you think you need in your next role to succeed (is it the risk limits? Resources? Compensation? Etc). I would be inclined to take the larger place for the reasons I mentioned, but hard to say without info on the risk limits, etc.

Edit: forgot to add, a strategy on $5mm where you are getting 30% is usually very different from what you'd be running at a MM (tighter risk limits, more capital). Do you have a sense of where you would do best? You would need some pretty good years on that $5mm to make it worth it. 

  • Partner in HF - EquityHedge
Dec 7, 2021 - 9:13am

Thanks for the thoughtful response. Not at a large fund now - at one that is a start-up (sub $50mm). My main problem at the current shop is lack of capital, resources, and growing personality problems with other individuals here that I can't ignore any longer. 
 

To your point, I need better resources, comp, and infrastructure - our strategy is up double digits for the year annualized and performance is solid - just need more gasoline I can throw on the fire to scale and actively deploy.
 

Your point about $5mm in capital is also well taken as I don't want my move to handicap me. Thanks for the great clarity as you've helped to paint an objective view of my situation.

  • Analyst 2 in PE - LBOs
Dec 11, 2021 - 11:51am

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