Whether to go after the name or not

I would probably ask the same question back to you. If your career goal is to work at a name brand hedge fund, AM, etc. you probably want to go the name brand route. This would also be true if you want to raise your own high profile fund. However, if you would be happy working at a smaller shop where you could have more autonomy and build a reputation based on your performance, that route could ultimately get you to the same place. To use your examples, I would say that Dalio built his career in more conventional (name brand) way while Buffett did not, so it really comes down to your own personality and style.

2B AUM doesn't seem small to me, and if there aren't a lot of employees you may be in a role where you can add value/take responsibility right from the start. But if you want to get to the Greenlight/Pershing Square/Baupost/etc MS/GS/JPM might make more sense, not positive.

IMHO, it's a pretty tricky question these days. In the past, I would have definitely recommended you go for MS/GS/JPM, because it's a structured, efficient and well-organised learning environment. Moreover, you used to get trained by and worked with senior people who were good or, occasionally, stellar risk-takers themselves. Furthermore, at a bank you would have likely been exposed to a broad variety of useful, edifying and educational experiences. The same isn't likely to be true for a junior at a medium-sized HF, which would have made this starting route relatively more risky.

Nowadays, the world has changed remarkably. I interview juniors who come out of IBs quite a bit and, frankly, the overwhelming majority of them are just not risk-taker material at all. Problem is that there's been a monumental skill drain out of banks, such that a lot of people who are left in senior positions are either relatively inexperienced or aren't risk-takers. As a result, there's really nobody to train the incoming juniors properly.

This is just in part my personal experience and part conjecture, so take w/a large pinch of salt...

Depends on how YOU want to structure your life, experiences and career

I'll weigh in here briefly. I would recommend the bank, NOT because of the brand name, but because of the skill set that you will develop there. You will get to dive deep on companies, learn modeling, accounting, etc, and most importantly see how transactions develop. If you want to be the guy on the cover of the WSJ, it's not about the amount of money you make early in your career or the brands on your resume... it's about your actual, bonafied ability to compound capital. The l/s equity hedge fund market will most likely be a shadow of its former self well before you are able to raise a dollar of investor money, so you'd be better off having a broader understanding and skill set. Ideally I would recommend starting out in PE.

I would absolutely recommend going to the bank first. I think people sometimes underestimate the value of brand, especially in the investment management sector (because the market doesn't care about brands). I think it matters a lot for careers though, and for learning how to do things right. Just my 2c.

will do a longer post later but I went straight to a HF out of undergrad and when people ask me i always recommend do banking first. I got very lucky but have heard a lot of stories about people that went straight to the buyside and don't have any traction when they want to switch, even within the industry.

I agree with the last few posters. I'd go the banking route first. You are only going to become a top HF manager if you are great. Some people are great without banking and some with it. At least with banking you will develop a versatile skill set that can easily be transferred. In terms of risk, going banking first seems the more risk averse path, which isn't necessarily bad.

I'd be echoing the 'go to the sell-side first' idea. Hence, go for the brand name unless you're 100% certain the HF world is for you and you will be able to perform there (no one's certain until one tries).

Honestly, no one cares about ones style of investing right out of undergrad. One shouldn't go into the buyside job assuming that one will be handed a billion or even a million to invest in the market when one doesn't know shit (right out of undergrad I mean). Most of the times when you go to the buyside right out of undergrad people know that you don't know shit about investing and markets and they teach you but slowly. Learning at buyside may not be that structured but the things you learn are much more valuable if your end goal is to be a PM. If my end goal is to be a PM I'd rather spend 5 minutes with a PM then an hour with a banker. That said, if you will be working directly under a PM your learning experience could be great. Not only that but also the buyside hiring and firing is pretty slow at some firms (don't hire much and don't fire much). Buyside firms (anecdotal evidence) usually almost always like to keep their talent with them. It's not like the usual up or out model. They find you places in different groups within the firm if you get bored with your current responsibilities or they don't require you in that group. Most people are set for a decade when they join a buyside firm. Now, are hedge fund jobs risky? Can the entire fund close? Hell yes,investing is risky, but if your specific hedge fund has a great track record, seasoned veterans then it's less likely that they will make decisions dumb enough. Moreover, if you want to be at a brand name fund it's definitely possible to go from buyside, but your chances might be higher through the sell side route nevertheless no surety.

Yeah lol at style of investing out of undergrad.

Unless you can start at a top well known hf would recommend banking first, especially because at this point of time you don't even know for certain whether you want to work at a hf.

Would some of you "you should start on the sell-side" people change your minds if it were a more well-known fund in question? I know a few people that landed front-office analyst gigs at Lone Pine right out of undergrad.

If you're really driven and somewhat entrepreneurial, go to the hedge fund. You can learn the skills you need to be successful while bypassing the banking experience and positioning yourself for greater upside. Your network will be weaker initially but go to as many conferences and meetings as possible in the city and you will be fine. You will learn to start thinking like an investor from day 1 rather than waiting several years. Break in immediately if you have the chance, but I would make sure you understand the firm's historical performance and process.

I would go with the 2bn L/S HF. There aren't that many people who start from a fund like that straight out of college, vs. a large group of people who come of of their 2yr IB stints from MS/GS/JPM every year. And thus starting as a HF investor will not only show in your resume that you were determined to be a public market investor in the first place, but also sets you apart from all others that have similar backgrounds.

Go for the hedge fund, you will be happier doing what you want to do and the experience is much more relevant to your goals.

Sure IB at BB is a great career path but if that's not what you want then why would you get in there?

Many people have proposed the bank because you will learn a specific skill set. I would propose something nobody has mentioned yet. Take the HF job and start studying for the CFA. Work in the industry you want, learn a broad set of investing skills on the job and through the CFA.

perhaps it is different in fixed income, but i have always worked on the buyside and i am very happy i never did any banking. When i was interviewing for better jobs (and once i got those jobs) the extra hard experience in the actual business was huge. Not only could i interview better then people with far superior backgrounds b/c I knew how to talk/act/think like someone who had been there before, but i was way ahead of the curve when i started. Even now I can tell the people my age (early 30s) who are still playing catch-up and learning the business vs. people like me who have been in since the begining and therefore are familiar with the business in a deeper way...its the difference between being a native/fluent-speaker in a language vs. someone who is still thnking about it and to me you want to get on that learning curve as soon as you can. That said, equities may be different because they are simpler and there is less time spent just learning the mechanics of the market.

Hard to answer without knowing you personally. For 95% of people the answer would be go to the bank, for it exposes you to many facets of finance in a lower risk environment. There is an awful lot to learn before you can actually be a relevant piece in the decision-making mechanism of a buy-side shop. And in the end of the day, if you're really good, then odds of building a successful career (in investing or elsewehere) are higher than average no matter where you start from.

Now, if you have been repeatedly told (preferably by industry people during an internship, for instance) that you have the risk-taking profile, attention to detail, cold-blood, persuasion & problem-solving skills and that makes you serious buy-side material, go for it.

But brace yourself because this career is sort of a rollercoaster, and the mood swings (firmwide or marketwide) can be unbearable to some. Not to talk about the common ego issues. Spend a lot of time investigating the people you are considering working for (and hopefully, partnering with in the future - remember that), their connections to money, their track record (investing and otherwise), their integrity, the firm's history of promoting recent hires, whether a "career track for new hires" exists within the firm, no matter how precarious it may be, etc.

Good luck.

leafclone:

You grew up admiring the minds like Ray Dalio

So if in theory you decide to go the sell side route out of undergrad what would be a better route IB or S&T? I feel like IB will teach you valuation/accounting but S&T will teach you how the markets operate/move. Is there a better choice or will both paths lead you to a PM role at a buy side shop?

Maybe people were using this as an example, but lets say the bank you are considering out of school is a low BB or MM. Would this change some opinions for those that chose the bank route? Just curious because I had this situation and I wasnt sure if that changes everything. Everyone talks about top BBs on here, but what about the rest.

I would have a slightly different take on the rest and say it depends on what your skillset is. Bearing in mind that I haven't worked in finance since 2011; much of this is what I have abstracted from observing various industries since then, as well as my experience before.

The fund is considerably more attractive if you are already a very strong analyst/have enough experience that the added responsibility that you get from the get go allows you to build a career based on competence straight away. I knew a few 21 year olds who were able to reliably pick good stocks before anybody else, and/or trade global macro with a high Sharpe ratio. They were bloody rare though - most profitable people at that age got lucky (e.g. beta in a rising market) and mistake it for competence.

The bank is a good place to find yourself, get trained and meet plenty of opportunities (either in the shape of networking or from the brand). It's also a better choice if you will face a later career change. Banks are good at moulding an inexperienced person into someone productive, risk taking or not. At the end of the day only 1 in 10 will make it from your graduate intake; maybe it's not you, maybe finance isn't for you (yet), and you won't know until you do it (it's not true that anybody can do it provided enough drive; it's a value for money relationship the perception thereof will change as you grow more experienced).

One last consideration is pay. I don't know what the state of the industry is at present. Back when I knew it, pure buy-side-from-the-start salaries were lower on average albeit with higher variability (you're supposed to "prove yourself" but really it is both a function of the unknown value add you will provide, your poor negotiating position, and your lack of negotiating experience stemming from the degree to which you believe in the first two). Banks have "fairly" transparent starting salaries which keeps them fairly high relative to smaller companies.

Finally, if you are good enough, the fund will wait for you, whilst the bank won't. It's hard to find good people, and I'm sure they will be understanding if you tell them "look, I'd like to take the opportunity, but I'd feel more comfortable with a couple years formal training and exposure to markets before joining you. Let's discuss it again in a year."

It is insane to me that new graduates and young professionals think they have any sort of realistic shot at achieving dynastic wealth in a standard l/s equity hedge fund format. There is a huge glut of unemployed hedge fund analysts, there is substantially no opportunity for entrepreneurship (with rare exceptions -- namely mick mcguire types, and people with really really rich daddies). With that in mind, the l/s equity skill set is absurdly narrow, and absurdly accessible, and pathetically nontransferable. So, I highly recommend going straight to a 2b l/s equity fund if you want to have a few good years but ultimately end up structurally unemployed.

Meanwhilst, understanding how businesses operate, and how transactions operate, requires the Equity Analysis skillset, but also requires a lot more. Those skills (learned in IBD or PE) are transferrable -- to C-level positions, to corporate development gigs, to more accessible/sustainable versions of financial entrepreneurship (look at sardar biglari as an example of this). And if I'm wrong and 2 and 20 is going to 5 and 50, and everybody in the US ultimately becomes a HF analyst, then you'll have the skills required to do that too

Just FYI, neither Buffett or Dalio went the investment banking or name brand route (this is in response to the person who said that Dalio went the more traditional name brand route). There is a large number of excellent HF managers who went the traditional route, but I think at the heart of it those who have the talent and interest to become great money managers find ways to distinguish themselves in the field, regardless of whether they start at Goldman Sachs IBD, a small L/S fund, or anywhere in between.

That said, I think the safest bet for you would be to take the name brand bulge bracket. As others have said very well, the brand name and the inherent broad (but shallow) skill set you develop as an IBD analyst will give many options down the line.

An alternative that could provide you with the best of both worlds- that is, day-to-day work focused on investing as well as a prestigious brand name that will open many doors- would be a well-known money manager, either hedge funds like Bridgewater, Citadel and Blackstone or mutual funds (of the non-index mirroring type) like T. Rowe Price and Dodge & Cox.

Just as an FYI, a hedge fund with 2b AUM is sizeable. It's very difficult to get these sorts of jobs, and kids that exit place very well after the program.

I know this isn't any advice whatsoever and I am in no position to tell you what is best for you but each poster above has said something credible with their 2 pence.

That being said, if you take the BB route, you have the opportunity to see how the fund progresses. Then you are left with two outcomes. A) The fund is a disaster and they wind down, at which point you sip your coffee, look at Frak next to you and breathe a sigh of relief OR B) It does well. Becomes shit hot and you sit there with your coffee, look over at Frank and feel like screaming. The point the regret will play on your mind and will most likely influence future decisions where there is a risky and risk-less option. What can you sleep better with at night?

The only way I could handle this would be to talk to someone at the fund. Someone with leverage and lay your options on the table. Make your concerns known about ditching the BB route by being risk on and float the idea that a year or two at a BB will provide you with the training and responsibility that his/her firm might not be able to match, and that a return after that stint to fund could be a better option. Maintain the relationship, keep in touch, ask how the fund is doing etc.

I would take MS/GS/JPM NYC anyday of the week over a no-name hedge fund. Those are some top options man. Since you'll have the exit opps to a HF later on after 2 yrs anyways!

However, if for say you were at a tier 3 bank in NYC, than going straight to the HF route is probably better.

I personally know people who have rejected / accepted GS/JPM NYC IBD for a top-tier AM / HF fund, and they were quite pleased. Those who had top tier buy-side offers but went to IBD regretted their decisions.