To start, I would like to open up my commentary to not solely hedge fund jobs, but also to the more general, “buy side jobs.” I will lop all research analysts, traders, and portfolio managers at mutual funds, insurance companies, endowments, etc into this category. In my opinion, for many of you looking to make the jump to a hedge fund career and are having difficulty, you might want to start looking for the more general buy side jobs and then making the switch 2 years down the line.
When I pull up the JOBS function on Bloomberg, and look for hedge fund jobs, I see a lot of job listings specifically looking for people with buy side experience. Why?
I think there are three main reasons:
Now, you might look at point 3 and say: “Won’t the sell side analyst have that as well?” Possibly – but a sell side analyst may have many reasons for putting a buy on a situation. I am not saying the sell side is biased to secure investment banking revenue – but it does make you raise an eyebrow. In addition, when the sell side puts a sell on a company, they may be shut out from even speaking with management. Just another reasons why I think the sell side leads more towards the “Buy” rating.
With that in hand, where can you find these buy side opportunities? The credit markets are crazy right now and honestly it’s not hedge fund money doing the buying. It’s high yield and investment grade mutual funds, its insurance companies, it’s index funds, etc. Let me list 8 kinds of places where you can secure front – office buy side experience:
Now, there may be more – but this is a good list for those that are having difficult securing hedge fund interviews because of a lack of buy side experience.Read More
A question I often get asked when candidates are applying to various buy side positions (including hedge fund jobs) is whether it is better to come from a generalist background, whether that be product group from an investment bank (i.e. leveraged finance) or from a specific industry group, whether that be on the banking or research side. In my opinion it really depends on what kind of hedge fund you want to join / be a part of.
A lot of the smaller funds rely on generalists to cover a lot of industries. These people will have a very good understanding of valuation but there industry contacts / insights will not be as deep. At larger funds, I think coming from a specific industry can be invaluable. And since most people that visit here are looking to join “name brand” funds, I am going to focus on this industry expertise and how you can use it as leverage to secure your hedge fund job.
Typically people trying to make it to the hedge fund world would investment banking analysts, recent MBA graduates, other buy side (including hedge fund) professionals, and sell side analysts. All of theses categories can do what I am about to explain – In my opinion though, the sell side analyst will have the biggest advantage at this point just for his/her ability to try reach management teams.
Before we get started, we need to pick an industry. I am going to use the shipping industry because it’s one I have never personally covered to any real extent.
First, let’s find the 5 companies in this space: Go to a Bloomberg and type: NSE Shipping <GO>. Look for a company in the space…I see Teekay. Pull up Teekay in Bloomberg and type: PVH <GO>. Now we are getting somewhere. This list shows the Bloomberg Peers of Teekay. Jot all those down (It’s a long list):
A P MOLLER – MAERSK A/S – B MISC BHD MITSUI OSK LINES LTD FRONTLINE LTD KIRBY CORP TEEKAY CORP D/S NORDEN SHIP FINANCE INTL LTD NORDIC AMER TANKER SHIPPING DRYSHIPS INC OVERSEAS SHIPHOLDING GROUP AEGEAN MARINE PETROLEUM NETW DIANA SHIPPING INC NAVIOS MARITIME PARTNERS LP SEASPAN CORP GOLAR LNG LTD GENCO SHIPPING & TRADING LTD NAVIOS MARITIME HOLDINGS INC TEEKAY TANKERS LTD-CLASS A TSAKOS ENERGY NAVIGATION LTD GENERAL MARITIME CORP SAFE BULKERS INC EXCEL MARITIME CARRIERS LTD KNIGHTSBRIDGE TANKERS LTD EAGLE BULK SHIPPING INC CAPITAL PRODUCT PARTNERS LP BALTIC TRADING LTD DANAOS CORP DHT HOLDINGS INC OMEGA NAVIGATION ENT-CLASS A FRONTLINE CORPORATION LTD
Now what I would do is note the names and number of each companies’ CFO and Investor Relations. If you have capital IQ you can make this process less cumbersome. If you can’t find the IR contacts name, it will be on their website.
With company names, CFO and IR names and numbers, it is start figuring out what analyst covers these guys. Again using TK as an example type TK EQUITY ANR <GO>. This pulls up all the analysts that cover TK. On Bloomberg, you can click through the analyst’s name to get their number as well (as well as other credits they own). Note these names down. And then go back to some of the other companies (the ones with the largest market caps will have the most coverage generally) and take down names and numbers of other analysts as well.
Now, start researching. Read a bunch of 10Ks and Investor Presentations. Get an understanding of the business. AND THEN START DIALING. Talk to as many of these people as you can – if they blow you off – who cares – Do not just TAKE value, also give value. For example, if you are talking to XYZ CFO you can say something like “I probably shouldn’t be telling you this, but I was talking to ABC CFO last week and he said shipping rates in the Mediterranean are weak” … You get the gist.
After your first round of calls, I would say you probably should have interacted with 50% of the list. And do you know what you do now? You call them again next month and the month after. You ask about industry events these people are attending, or conferences, or trade magazines. Once you get into the thick of it, your contacts will increase exponentially.
And that is how you get industry knowledge and a deep industry contact list. It’s simple but VERY few people that read this will go out and do the work necessary. No emails either – dial for dollars.
I once went into an interview and the second question I was asked was: “Who do you talk to in the retail space?” I listed the vendors, CEOs, CFOs, IR professionals, reporters, sell side and buy side analysts that I knew in retail. Not only did I list them, but I provided color on what these people were saying about the industry. That is valuable information. Information is the most valuable commodity? I think so. Do this work, and next time when you go into a hedge fund job interview, you will be prepared to blow them away with your industry knowledge and contact list.Read More
I often get asked, “Hunter – what are typical hedge fund interview questions for XYZ fund.” Now, unfortunately (or fortunately depending on whose vantage point you are coming at it from), I have not interviewed at all funds out there. And I know each fund has a different set of interview questions for different candidates. For example, I know of one fund that literally asked probability questions throughout the entire interview process for one candidate, and then barely asked any for another candidate friend of mine. Alas, I do not have a silver bullet. But when I am in the interview seat, I like to ask three interviews questions of all candidates:
…you should probably also know how to set one up as well as a hedge fund’s basic structure. The world wide web yet again comes up strong in a INCREDIBLE document from www.howardrice.com which I have embedded below. On any hedge fund interview, you may want to have these things in the back of your mind so you know what you are getting yourself into. Enjoy!
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