I am a freshmen in college and about a year ago, I garnered an interest to working in a hedge fund. I am struggling with choosing the correct career path that would amplify my chances of getting into a hedge fund. So here's the question: Which is the better path into a Hedge Fund, Investment Banking or Equity Research?
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the best route to a hedge fund is developing your interest into passion, becoming competent through active practice, specializing in a strategy.
i'm assuming you're interested in equity l/s. so go ahead, read some filings and think about the future, express your arguments in writing. see if your ideas would have made someone some money. you'll find out if you actually like this stuff and if you're any good.
you're young, you have time to get very good at this and go straight to a fund. that is, if the passsion and competency are there
How to figure out what asset class and strategie you want to work in HF?
This doesn’t really help you land a HF gig though...
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How did you land your first job without any experience? Did you sent several cold mails with stock pitches to HF?
yeah just go to the HF and say "oh i've been thinking of some investment theses and i have done some back testing... hire me?"
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Wow! a HF guy!! Well it is obviously working out great for you.. I mean, you still have time and energy to come on WSO and try to shit on interns. Your career does sound pretty awesome!!
Ironically, this probs will be me in a few years. See you there, I guess :)
Yeah quite frankly either is a solid route that will pay well at an early age. Whichever you decide to do, just do it well and stand out amongst your peers and the door to HFs will open.
i think IB for 2 years in BB will open your door to anything & anywhere !
What school do you go to? Target / Non Target? That will to some extent help as well. Most common path is do IB for 2 years / some combination of IB and PE then head to a HF. If you decide that you like a certain strategy / style and want to jump right into a fund out of college, it's going to be hard because there aren't as many seats to begin with, but doable if you start early as others said. I did the latter and it was definitely hard but worth it at the end.
Sorry for the SUPER late response.
I currently am at a Community College. I am looking to transfer in the fall of 2021 to a variety of schools ( Fordham, Columbia, Georgetown, Baruch, Villanova, NYU ). I have maintained a 4.0 so far but I still have 2 semesters left before I make the switch. Nevertheless, I am confident that I can maintain at least a 3.8. Which schools would you say are the best for setting me up for Investment Banking. Also, what steps should I take to prepare myself for a hedge fund?
Probably NYU/Columbia. However, I’m a recent Baruch grad. Plenty of my classmates went on to IB at Citi/BofA/GS/JPM. I’ve realized that lately IB is more about your actual perserverance and connections. Maybe 10 years ago, IB was guaranteed if you went to a top-tier school. You can go to Baruch then onto IB if you maintain a high GPA.
Also have a question. Is HF recruiting from IB as rigid as PE recruiting?
For the latter, I know “on cycle” recruits are valued a lot higher than analysts who don’t recruit until their second analyst year. Are hedge funds strict about giving interviews to analyst 1s, 2s, and 3s, or even associates?
Popular hfs usually "recruit" off the 2+2 path while smaller ones are completely random
What is the 2+2 path?
Build a solid trading system and track record and start your own fund
I’d recommend trying to get an internship in investment banking. That itself is a task. Decide if you like it.
read people’s pitches online and join an investment club. Do you enjoy this? Try other things too.
If you enjoy it, read good investment pitches online as well as investment classics. Only do it if it’s fun for you. If you do this now, you’ll stand out when you interview 6 years later because nobody actually does this.
Another thing to do is reach out to alumni that have worked in investment banking and ended up at hedge funds. Ask them to guide you.
be really open to other things. You’re young and there’s a lot of career paths to explore.
Hi, thank you for this great reply and for clarifying things up. I'm going to be working on a stock pitch. How can I improve upon my knowledge in investing and about various HF strategies? Any resources you'd recommend for finding top stock pitches? Hoping to find inspiration/to learn from great pickers.
historical Ira Sohn pitches, highly rated Value Investors Club pitches. Try also write ups from Citron and Muddy waters. Try looking up “value investing classics” on Google and read some of the commonly recommended ones. Read professor damodaran’s blog.
Can't thank you enough for these resources........great stuff for an aspiring L/S trader as myself.
Which HF's recruit out of undergrad??
Point72, Millennium, Silver Point.
EDIT: Citadel now too apparently.
If all else fails, just buy your own at https://www.wallstreetoasis.com/forums/hedge-fund-for-sale-0
GS TMT/Evercore M&A —> Blackstone/Apollo —> HBS/GSB —> Tiger Global/Tiger Cubs —> Partner/PM —> Make 8 figures a year for 10 years —> Start your own fund —> Make billions —> Become the next Ray Dalio —> Retire —> Die.
You can skip HBS/GSB lol
True but it’s just more elite to say I am a Harvard MBA regardless if it helped develop your career or not. On a serious note, many of these hedge funds weirdly do require/prefer that you get a M7 MBA. Not all but definitely some.
Both paths will lead you to your goal. In this case, pick the path that you are most passionate about. So if you have a keen interest in investment banking, then go into investment banking. If you can't stand the thought of investment banking but want to go into equity research, then do that. Pick the one that interests you the most so that you will work hard at it. Either way, you will be headed for a lucrative career.
The best way to get any job is to prove you can do it from day 1.
If you want to work at a hedge fund, you need to prove you have been properly trained for whatever strategy you pursue. How do you get trained?
Investment Banking (IB) – you learn financial modeling / corporate finance / maybe an industry vertical.
Equity Research (ER) – you learn financial modeling / really master a group of companies / an industry or sub-industry vertical.
Other – there are other paths to working at a hedge fund. I’ve known ppl who started at as investigative journalists and then work at short funds or are PhDs/MDs and work at biotech HFs. This path is less taken and more niche.
Whatever you do, you need to be trained properly. Investing is a largely an apprenticeship business, you learn from someone more senior than you. Don’t get me wrong, the CFA, a top undergrad or MBA will position you well, but there’s a difference between active and passive learning. Working on the front line in IB or ER will give you the skills to work in an investment role.
Thank You! Whats your take on Sales and Trading?
With S&T, it really depends on the role.
Desk analyst - you can definitely move from there into a HF analyst role. You also build up a nice buyside contact list.
Sales - depends, if you're on the sales side covering equity accounts, it's a harder pitch as you're often a presenter of 'best ideas' from the firm and a facilitator of calls w/ the publishing analysts. But if you're doing sales on a niche product, say distressed, you potentially can become more of a sales-desk analyst type.
Trader - obv you can potentially move into the trading side of a HF. Just keep in mind, the BBs have legions of traders and the trader seats at HFs are far less.
I wouldn't by any means say S&T is a direct route to a HF, it really all depends on your role and how that transfers to the buy side (if at all in certain cases).
Gs/ms
I have many friends in the industry and I worked at 3 of the main l/s activist hf in Europe. My advice is:
Work hard the first 2/3 years of your career at top name places (think GS, MS, JPM, McKinsey, BX), land in the top ranks of your analyst class, network as a dragoon and you’ll end up receiving offers for assessments. The key is strong credentials and good connections - otherwise, it’s really unlikely that they will call exactly you.
My tip: the trand nowadays is to hire more and mode consultants. Moore capital and TCI in London both hired guys from McK last year and the last addition to elliott was this guy with McKinsey + H&F gig and 1 year at Apple
Would love to PM and discuss!
Same here, would love to hear your insights on activist HF in pm!
Would there be any possibility of getting hired after working as an analyst at a MF under the RE credit or equity team?
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