Why do people leave event-driven hedge funds for L/S funds?

Is it the pay, upside? Seems like a completely different vibe. Seen people go Silver Point/Anchorage/King Street to Tiger Cubs.

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Comments (31)

  • Analyst 1 in Other
Jun 10, 2020 - 6:47am

I don't think its as common as your might think.

  • Intern in IB - Gen
Jun 10, 2020 - 11:58am

Curious as well about this.. See a lot of Silver Point people leave for L/S funds especially

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  • Research Associate in HF - Event
Jun 17, 2020 - 6:51pm

UGs love to pretend like working at the most prestigious job out of Wharton somehow offsets how much it sucks working at SPC.

Ask Prat how much she liked it, lol.

Jun 10, 2020 - 3:33pm

It's definitely easy to get a bit of grass is greener mentality when you see folks at tiger cubs kill it picking FAANG or consumer/tech names simply because they like it or see long term growth.

Event driven / distress is fun but the capacity for stress/complexity and resources it takes getting into these hairy situations sometimes just doesn't feel worth it.

  • Analyst 3+ in HF - EquityHedge
Jun 10, 2020 - 9:24pm

Agree with the above my first thought was "..This isnt happening much"

Possible reasons

  • Less transaction/catalyst driven therefore longer term and less stress
  • Tiger Cubs would typically pay above your average event driven fund
  • Strong capital base at the Tiger Cub
  • They got into Event as their first HF job becuase it was available to them and always wanted to be at a Tiger Cub
  • Analyst 3+ in HF - EquityHedge
Jun 10, 2020 - 9:52pm
bananabanker978:

Tiger cubs pay more than anchorage, SPC, king street? Thought top event driven and distressed funds paid more than the tiger cubs / grandcubs...

I more listed that as a potential reason as in it could potentially pay more, it is too dependent on fund to say across the board better or worse.

  • Analyst 2 in HF - EquityHedge
Jun 11, 2020 - 1:33am

In terms of all in potential / career trajectory (launching your own fund down the line) I would say yes if you are at one of the top tiger funds.

Jun 11, 2020 - 8:54am

After a while, they probably run dry of catalysts insights because they no longer have valuable info on what deals were in the pipeline (at least in the bank they worked at? Who knows.

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

  • 2
Jun 11, 2020 - 11:08am

Until you've worked at a real HF, you don't understand the pressure. Its way more brutal in banking, and most of PE.

Teams are small, politics (sure, your results are evident but its about how you present your thought process and is it repeatable), and people get F'd on bonuses all the time since there's no HR and you'll just have the next monkey replace you.

Array
  • 3
  • Analyst 1 in Other
Jun 11, 2020 - 12:51pm

Did you mean "more brutal than in banking and most of PE"? And what do you define as a real HF?

Most Helpful
Jun 11, 2020 - 5:10pm
dontbugme:

Until you've worked at a real HF, you don't understand the pressure. Its way more brutal in banking, and most of PE.

Teams are small, politics (sure, your results are evident but its about how you present your thought process and is it repeatable), and people get F'd on bonuses all the time since there's no HR and you'll just have the next monkey replace you.

This (kind of). And it's just not for funds in which everyone reports to CIO/PM with ideas. It's similar (in a sense) to multi-manager and more trading oriented places.

Why? You PnL is daily, marked to market and evident for bossman to see. In many strategies there is a lot of leverage as well. The numbers move. Every. Single. Second. Your PnL changes as a result. You can be canned any minute. At any time based on that.

There is also your boss or the head PM/CIO etc who can be prone to questioning every judgement call you/your boss make.

SPX up 20%? He might say "I saw that move coming, anyone could have.. you weren't long enough." SPX down 15? "Obvious short. How did you not catch that. How did you not move the book around?"

If you said "Hey dude why didn't you do those trades?"

You get the old

"Hey I'm just the manager. I'm not going to do your job for you."

Things going bad with your pod/desk/team? Hopefully your boss doesn't blame and can you (to save his own skin).

This is not to say that banking or PE/illiquids don't have their own stress. They do. And they are just of a different kind. At the senior level guys in HFs can and still should worry about their books all the time. At a senior level in PE, guys SEEM a lot more sanguine. It may be their being polished and better presenters, but it also may be the fact that the capital is locked up, the fee stream is an annuity and they don't have to MTM daily.

Different mentality. Different characters. Different kinds of stress...

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 8
  • Intern in IB-M&A
Jun 11, 2020 - 6:05pm

What personality suits PE/ IB better and personality suits HF/ S&T more? How do you deal with months or quarters of downward performance? Every day/ month is filled with some sort of stress or insecurity. How do you deal with this?

Jun 17, 2020 - 8:45pm

THIS is why you should join a HF that holds investments for long investment horizons with the investment thesis spanning years, and are judged over a 2-5 year period, not just based on quarters, etc.

It's RARE to find Hedge funds that do this successfully, but there some out there if you look hard enough

  • Incoming Analyst in Other
Jun 11, 2020 - 12:34pm

How easy is the switch / case to switch from distressed HF to one of the tiger cub like funds. Do HHs silo you into a distressed guy or do PMs / interviewers at the funds view you as someone who has developed a specific mindset which makes it harder to jump?

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