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:

  1. People with buy side experience have experienced profit and loss on individual investment recommendations which (in my opinion) better sharpens your skill set than having a “Buy” recommendation flop.
  2. People with front – office buy side experience will have more familiarity with middle and back office processes (CDX rolls, trade breaks, etc) that a small to medium sized hedge fund might need as their infrastructure may only consist of a CFO.
  3. People with buy side experience can come into a situation and have a number of recommendations ready to go.

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:

  1. Traditional mutual fund/Asset management company. Probably the best place to get your feet wet, but sometimes just as hard to break into (and even hard) for the Tier 1 firms (Franklin, Legg Mason, Fidelity)
  2. CLO manager. Fantastic place to get work if you want to move to the credit / distressed world. Unfortunately, lots of consolidation combined with a broke securitization market has caused the number of jobs to dry up.
  3. Insurance Company. Very good place to get experience but (depending on the place) can limit your investment options (i.e. little equities, can’t go short). Of course if you were going to Markel or Fairfax, I’d say it would be the best option on the list
  4. Endowment. Very often a lot of “fund of funds” business but that gives you an opportunity to meet many people in the investment world. Some endowments take individual investment risk and these places can be great because there is just SO MUCH MONEY.
  5. “Trading Shops”. I do not have a better word for it. These places traders trade the house money and get a small cut. Good if you enjoy day trading. I would avoid places asking you to put up capital as well.
  6. Private Equity. Incredible to have on your resume, but also just as hard to get involved in as hedge funds.
  7. Family Office. A good combination of many of the shops above. I have two friends at two different family offices and both love it. Make sure you get involved with one doing individual investments versus just allocating to funds.
  8. RIA / Investment Advisor / Seperate Account Manager. Unfortunately, I do not know many people at these sorts of places so hard for me to comment.

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.

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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):

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.

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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:

  • What are your thoughts on the equity / credit markets? – Now, technically this is unfair because I generally have little conviction one way or the other in terms of where the market is going to get in the next month or three months or six months for that matter. Instead, what I am trying to get to is how you approach market valuation and really who you read / listen to. If you quote something from John Mauldin I will probably come away more impressed versus quoting something from AJC (if you don’t know what whose initials those are, you probably should start reading more). I am not looking for an answer such as “I think the S&P; 500 will end the year at 1150” – I am looking for things like what is happening with capacity utilization here and abroad, where inventory levels are at retailers across the country, what is going on in train traffic, etc. I want to see that you are interested in these things and have a view point that you can articulate well and can base in factual data and not solely water cooler opinions.
  • What is your favorite investment right now? I do not want to hear about your best investment from 2005. I want to know if I gave you $5M in capital today, and you had one shot, where would you invest said capital. If you say “Well – nothing is really interesting right now” I may just ask you to leave right there. Again, I might not agree with your assessment and frankly could be short a long your propose, but if your reasoning is sound supported by fact, you may have my ear. Every candidate that goes into a buy-side interview must come equipped with two or three ideas he/she can succinctly present (and defend) because that is how you are going to add value in the trading room
  • I will pose four investment alternatives: You rank them in order of preference. 1) A single site casino 2) A single peaking power plant 3) A commodity chemical company 4) A regional retailer. Note: All 4 companies have the same top line. I hope no one I interview is reading this post right now because that is a unique question, but I truly think it sheds light on how an analyst thinks. This question is solely for credit interviews mind you, but could be spun for long/short equity funds. In my opinion, there is a correct answer, but I have heard fantastic explanations of why I was completely wrong. For this type of question, I want you to list the pros and cons of each of the four alternatives and then tell me how that relates to credit spreads, default risk, recovery rates, etc. I know it sounds tough, but each of you should try this exercise on your own and see what you come up with. Hell, shoot me an email and I’ll debate it with you if you want.
Over the next month, we hope to have the new site laid out and on a new server. We plan to have our own hedge fund job board, and contributors helping candidates out with buy-side interviews, resumes, and case studies.

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First of all, thank you to all readers who have sent me emails over the past few months. We are lucky to have such a strong readership.
Secondly, I wanted to announce that I have begun development on a new layout / format for the site which will combine hedge fund and buy-side interview, resume and career tips, as well as a number of articles myself and a few colleagues have penned over the past few months. If you would like to contribute, please contact me at hunter@
Finally, we are looking for one or two advertisers to partner with in the site. As some of you are aware, this site ranks very high in Google for a number of queries related to hedge fund jobs, hedge fund careers, hedge fund interviews, etc. If this is something your company would be interested in, please email mat at hunter@

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…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 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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