Undergrad --> MF PE. Next steps?

I am a senior at a top target and received a full-time offer at a large MF (along the lines of BX, KKR). In the early stages of undergrad, the game plan was to do 2 years in PE, then go to an elite HF, either L/S or activist. I came into undergrad with a specific goal in mind, and even at a target I had to work my a** off to get it, but I'm here now. Friends of mine have gone down the same "target --> MF PE" path as me, and have gone to top HFs (tiger cubs, top activist/distressed shops etc), so I am aware of the range and caliber of exits that will be available to me. I plan to stay on the buyside, but to be completely honest, I don't know exactly what I want to do long term - MF PE vs L/S equity or activism @ an HF - which is reasonable considering I'm young. What I can say is that I find all three to be equally intellectually stimulating (that's something I care a lot about), and for me, I think it's now a matter of culture and future comp. I am sure that spending these next 2 years in PE will give me a better sense of whether or not I actually enjoy the work, but I did have an awesome experience in my internship. I get a sense that I can't really make the wrong choice here, but it's my future and it's been on my mind; I'm interested in hearing everyone's thoughts. With that being said, as someone who has developed a true love for investing, which of the three paths will yield the most upside in terms of being intellectually stimulated, a good culture fit, and future comp potential?

 

Congrats man, you clearly worked really hard and are killing it, but you sound like a mega douche saying “young gun on the golden path”, don’t think that attitude fly’s in the HF world like it does in PE/IB so would watch the hubris

 

Oh shoot my bad, thanks. I'll change the title! Any advice btw?

 

acknowledging mistakes is a great skill that a lot of brilliant people lacks, so good to see that you have it

 

I dont come from a similar path so my advice likely isnt accurate.

I will say activist is more like PE, and the larger Tiger Cubs operate with a PE style investment process, in terms of it being very formal, so would focus on large funds. The more nimble smaller funds with similar AUM/IP to the big funds are less formal and would likely expect you to produce more on day 1.

 

Honestly one thing that was jarring to me was that it was difficult to assess what jobs I would like until I hit the desk. I'm on my third out of college now (including similar caliber PE firms, the super large core PE fund but not conglomerate MF PE) and what I would say to you is take it one day at a time. You will have plenty of opportunities for HF recruiting, and those are in general much more ad-hoc. What I would also do is talk to all the headhunters, ask what L/S and Activist funds recruit on-cycle, see if those really tickle your fancy, if so, you can run hard at those, but if not, be opportunistic, because you will have that luxury. Spend more time talking to alums once you hit the desk because it's one thing to talk to alums as a student but once you really hit the workforce (internship only... kinda counts) the things they say will "click" more. If you want to keep "jumping through hoops" --> MF PE --> Lone Pine --> ??? you can always do that, but you have the luxury of having such a good foundation to your career you can do something more creative / fun / off the beaten path if that appeals to you. Like I said just poke around and talk to people and you'll figure out what you want to do (and if not, you can just keep hoop jumping until you do).

Just some rambling thoughts from an old guy.

 

Thanks for the advice, I really appreciate it! Given your extensive background, would you say that there is any significant change in culture/lifestyle/hours as you change shops/roles? And would you ever say that you have been "bored", meaning the opportunity set is dry? For example, in distressed, I imagine, there wasn't much to do in the mid-late 2010s (besides oil of course, and COVID now but that's besides the point). I feel like I would have a hard time dealing with something like that. In equities, I feel like there's always something to do. But then again, I don't know much/have much experience and could be completely wrong. Do you think it would be wrong to shy away from things like distressed (for this reason), and to put all my attention towards L/S or activism?

 

You are going to be so busy and hate your life so much when you hit the desk, don't worry about this right now. It's impossible to have an opinion on this until you experience FT work for at least a year or two. I don't expect you to fully agree with what I'm saying, because you're young and excited to work which is awesome (really really is) but this is what I expect you to do: keep this advice in the back of your mind so that when "new job smell" joy of work wears off, you aren't surprised. None of these jobs will bore you, by the way - unless you got really unlucky and picked a shit trend (e.g., shale), you either always have deals, or are always hustling, or something. It's not like things just slow down and you dick around all day.

 

My 2¢:

Out of the three paths you are considering, your level of intellectual stimulation, workplace culture fit, and future comp potential all have to do with you personally, not the investing path you choose. As you reach the decision point you describe, you should determine what kind of investing you think you want to do over the course of your career.

Try to put yourself in the shoes of a senior person at each of the three investor types. Then, (to the best of your current knowledge) consider their day-to-day responsibilities, decisions made, etc. Think about what types of decisions you would like to be making in 20 years.

I would encourage you to avoid thinking about comp. If you enjoy what you do, are good, and become the next Kravis, Stephen Mandel, or Paul Singer, it's not going to be comp that drove you to choose your preferred investment strategy.

Culture will be driven in part by which investment path you take, though culture will ultimately be firm specific and therefore up to you. For each of the three strategies, I can think of a firm known for being full of assholes and a firm considered to have a reputable culture.

Caveat: I don't believe what I have described is feasible while in school, though you can form an opinion which is then confirmed when you join the workforce--speaking from firsthand experience.

Maximum effort.
 

I don't think you can make the decision now. Over time at the MF PE role, you'll find out if you enjoy the long-term investment mandate. If you end up enjoying it and are set on being in the public markets, go for a Tiger cub. If you're more of a trader, MM HF will likely suit you better. But for now, just enjoy the gig you have coming up and don't stress.

 

I knew a guy that talked like you. Distress this, tiger that, activism for dinner. Now he works at a small pod at Citadel

 

Yeah man I completely get it. I didn't come from much and I really had to grind to get here, and I'm gonna have to grind even more to get to that next level, but at least the door has been opened for me. I still have a chip on my shoulder and I won't let my foot off the gas. Appreciate it

 

"I am sure that spending these next 2 years in PE will give me a better sense of whether or not I actually enjoy the work"

I wouldn't be so sure of that. It depends on the fund / team of course, but unless you are very lucky these 2 years will be a bit miserable and won't tell you what being a PE investor is really about.

Comparing these two paths, I think an under-rated consideration is the job security and relatively lower comp volatility of PE (after the first 2 years) versus HF.

 
Most Helpful

So this is what will happen. You will go to MF PE gig. You will either not mind it or hate it with a passion. If the former, you will continue along the MF PE path for the rest of your career. If you hate it, you will move to HF.

If the latter, I personally would avoid activism. There will always be a place for activism but these things tend to cycle in out and out of favor over the course of a long career. So what is popular today might not be popular tomorrow. Separately, in general, activism also takes a certain personality. There's ValueAct activism (and who knows what happens behind closed doors) and then there's Elliott activism. I imagine you are probably thinking the latter. If the latter, the job is extremely contentious. It sounds cool and sexy until you realize that your job is to get people fired. Is that something that makes you comfortable? If so, great. But for most people, I imagine that it's extremely tiring to go into the office everyday knowing that you have to fight with someone.

Looking back at my own career and those around me, I would say that the most important part of being successful in any career is being able to find the right fit with your personality. And finding that right fit requires being honest with yourself about what you like / don't like, what you are naturally good at / bad at. If you can do that, you will find the best path for your career, whether that is PE, HF, activism, or some other area. 

 

This was incredibly insightful, thank you. Definitely showed me a new perspective on activism. What are your thoughts on L/S equity long term & at the MM/SM levels? Not sure if I would prefer the short term MM style or the long term SM style, I would imagine the latter, but again I am not 100% sure yet. The narrative I've been hearing is top SM > MM, for fit, lifestyle, comp, and performance -- do you agree with this?

 

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