Where will I learn more? Single PM or larger firm?
I started my career at a small quant firm, and have spent a couple years in a PE-ish role. I'm looking to move to a public market buy-side role. 5 - 10 years down the road I'd love to start my own shop, or at the very least be running my own book somewhere.
I just started actively recruiting and am talking to a couple smaller managers, as well as a couple larger name shops.
By single PM shops, I generally mean places I'd be the first analyst, all with good performance, all assets in the 200 - 500 range, and PMs with really impressive backgrounds.
By larger shops I generally mean operationally large -- think Elliott, Baupost, DK etc.
Curious which of these y'all would go to, while not worrying about comp at all. I'm more focused on ability to grow, amount I'll learn, and tracking the 5 year goal of running my own book. My basic thoughts are that single managers are riskier-- both in that they could fail, and if their process sucks I'll learn the wrong things, but generally I'll wear more hats and be a more integrated part of the investment process. Larger shops have more pedigree which could help, more PMs to learn from, but generally I'll be more of a commodity.
Basically, which of these two would I learn more from?
Idk
You really want that deal toy eh?
Nah. Someone else can have it
Who are you and why have you been spamming this forum recently with your idiotic non-contributions?
Where do you think you’ll learn more?
Nobody in their right mind turns down Elliott, Baupost, or DK for a $250mm one man shop.
Why is that though? I would agree, doesn't seem like a choice many would make, but the selling points at a smaller shop seems pretty strong over the long term.
I think you’ll learn more about investments and managing a portfolio at a larger place. You’ll learn more operationally at the smaller shop.
The larger place will have solid infrastructure (including relationships with brokers, technology, etc) and investment processes that have been tested and improved on for a while. You will probably have a decent risk management setup. This will all allow you more time to think about how to invest, and less on how to make things “work”. The risk is that you just take the information/process and don’t question it or take the time to understand it. It’s one thing to have a process that says you shouldn’t have more than X exposure, it’s another to understand why that is the case, when it helps/hurts, etc. You can get by without really understanding some of these nuances.
At the smaller place, as you said, you’ll wear many hats. I think that sounds exciting at first, but can be a big distraction from thinking about money management. What I’ve generally seen is that even if a PM is a great person who wants to help and teach you, if the team is too light, you end up having to do a lot of the “operational” work and you spend less time on the actual investment process. From talking to a few PMs who run solid but small books, hearing them describe the analysts work, etc always points me to the analyst ending up doing a lot more mix of back office work just to have the fund operate. I would make sure the team is well staffed and it’s not just you.
Somebody might. Depends. Prestige is only worth so much. People turn down GS for Moelis EVR etc
This is the most absurd comparison.
Evercore is a public institution that does multi billion dollar deals every week. They pay more than GS at every level. They have a huge brand.
Your HF career is more about surviving than learning, IMO. Look obviously don’t go to a big fund if the culture is toxic, but otherwise big brands help you survive by signaling that you’re talented. There are dozens, if not hundreds, of <1bn HF closures every year. This is an industry facing secular headwinds and assets are declining. One or two bad years as an emerging manager and you’re done.
DK, Elliott and Baupost all offer a very clear path to 7 figures. They’re institutions that will be around for 10+ years. Their investment teams have low turnover, and those that leave end up at good funds, because they have a brand. The EMV on your career is literally 5-50x higher at a place like this than a $250mm fund.
If you want to work for a lean team, rather than a big institution, you go to a $5bn+ single manager fund. Those roles can be good because there is enough AUM to pay and thus may be comparable with DK/Elliott/Baupost.
Performance means nothing over last 2-3 years, especially for a sub scale SM who prob doesn't have any real risk/factor parameters. We are already seeing how quickly some of these "alpha" can be wiped out within days
Totally agreed-- I would have a ton of research to do to make sure the process is legit. But I'm sure I could dig into both (a) his fundamental process, and (b) his risk management / portfolio management process. Also, wouldn't jump on with a SM if they didn't have a strong pedigree, and if there is a 10+ year track record at a prior firm, I can probably figure out how sustainable his return have been through at least 2 market cycles.
If all that checks out, then what?
I mean, it's a coin flip at the end of the day. If you feel like u gel well with the PM/team and can get paid you on your performance then definitely have higher upside at the SM. Just a matter of big firms being more bureaucratic
Ignoring everything else, re learning, it's literally all about the people. Who do you vibe with most and look up to? These are the people that are going to take the time and energy to mentor you and teach you and maybe even connect you. These jobs are not only tough, but they are very very fickle and seats come and go in a flash. In that sense having a mentor/sponsor is so incredibly important. I have never really had one after the first two years of my career (across Allocating as well as Trading) and I cannot express how different my career (and paycheck) could have been with proper mentorship/someone looking out for me.
TLDR: go where you vibe the best with people. Sure prestige is great at a top shop (returns haven't been great at most named shops), but prestige won't help too much if your ass is out on the street after a year or maybe two because your boss was canned and have no one to vouch for you.
Hi Jamoldo, kind of a personal question, but what do you think prevented you from developing a mentor-like relationship with someone older and with more experience? In all your posts you emphasise the importance of networking, so I would have imagined you had reached out to a lot of people whilst you were still a student and as you started out in the industry.
Excluding the risk-reward decisions of going smaller vs larger, I'd say go to the small shop only if you think your boss is an absolute rockstar + will treat you well. Otherwise go large-shop.
Smaller Single-PM Shop = It will likely function as an apprentice-ship model if your boss is even partially invested in you. This is great for LT learning if your boss is amazing at their job and terrible if they aren't.
Bigger Shop = Likely to be a lot less explicit mentorship and more "do these tasks and if you're decent you'll learn through osmosis over time just by being here". You will encounter a lot more people at a larger shop and will get more perspective, so chance of you learning more assuming you make the effort is higher (but ceiling is lower given most amazing people won't stay at a large shop and give you an apprentice experience).
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