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I'm a Hedge Fund Analyst. Ask Me Anything

H

HFAnalyst1

New member
Dec
8
0
Hey,

I've been asked to do an AMA on here, so fire away with any questions you may have (but don't bother asking salary).

I'm also willing to give feedback on any CVs so send them my way if you want, though I probably won't get back to you before the weekend.

Background:
- 2.1 Humanities Degree at a semi-target
- Completed 3 internships before landing a full-time position at a boutique M&A
- A couple years later I was recruited to a mid-size Hedge Fund ($300-500m AUM) as an analyst, which is where I've been for the past 2 years.
 
Thanks a lot for doing this.

What advice would you give to students who look to work in your profession?
Why did you choose a career in finance?
 
How do you deal with stress? How do you manage your personal finances and how did money change your uni student self? What strategy does your fund use? Thanks.
 
Canary Wharfian said:
Thanks a lot for doing this.

What advice would you give to students who look to work in your profession?
Why did you choose a career in finance?
Click to expand...

Perseverance is key but so is luck. It's not the most heartening thing for me to say, I know, but honestly so much of getting your foot in the door is just dumb luck, so long as you don't completely mess up your application. There are so many applications from so many people with similar backgrounds/experiences that there is very little to differentiate between everyone- so you have to get the basics right, no silly mistakes, and absolutely get as many Spring Week offers as you can, these are now the best entry/fast track to a summer internship.

I chose finance because I had a genuine interest in markets. I had begun investing with money I'd saved from my first job and just became transfixed with the equity markets. If you don't have a passion for the job, you won't last long.
 
Trigger said:
Does the Fed raise rates?
Click to expand...


I'd say so. The markets are assigning an 80-90% probability that the Fed does, so markets are largely pricing it in already- this should limit any worries the Fed may have to how markets react and to be honest they don't really need need another excuse to do so given the strong non-farm payroll numbers in the last couple of months. The limited actions of Draghi will also help. So, yes my money is on the Fed raising.
 
nicki said:
What's a typical day for you? Thanks
Click to expand...

6.30- Wake up
7.00- Check Bloomberg on my commute and read through any important emails, perhaps text the Portfolio Manager with any important news overnight/that morning
8.00- Check how our positions open, go through emails and discuss early market moves with the team
8.30- Usually start work on an investment idea, so reading through research reports, bloomberg, 10Ks etc.
12.00- Grab a quick lunch and eat it at my desk
12.30- Start formulating my thoughts on the stock, typing notes, and creating models
- Discuss with sell-side brokers and analysts to get their thoughts and question their thesis
- Perhaps arrange a call/meeting with the company itself to dig deeper
(can last as long as a day or even a week(s) dependent on the size of the project)
- Then discuss/present to the PMs and execute/ditch the idea
 
Arbitrageur said:
How do you deal with stress? How do you manage your personal finances and how did money change your uni student self? What strategy does your fund use? Thanks.
Click to expand...


We run a Long/Short strategy
I'm pretty good with dealing with stress, I've always been a pretty calm guy so I don't really let it affect me too much. I think you just have to remember that when you invest, you do so with a long term view, so don't let short term market noise get to you. Although, having said that I've only been doing this for 2 years and have yet to witness a complete market crash a la 2008 so perhaps my nerves are yet to be fully tested.

I try to save 20-30% of my salary each month and invest it the market through a stock and shares ISA (highly recommend it if you're starting out and wondering what to do with excess cash)- and make sure to use all of your ISA allowance each year, compounding is the greatest force in the universe and all that...
 
HFAnalyst said:
6.30- Wake up
7.00- Check Bloomberg on my commute and read through any important emails, perhaps text the Portfolio Manager with any important news overnight/that morning
8.00- Check how our positions open, go through emails and discuss early market moves with the team
8.30- Usually start work on an investment idea, so reading through research reports, bloomberg, 10Ks etc.
12.00- Grab a quick lunch and eat it at my desk
12.30- Start formulating my thoughts on the stock, typing notes, and creating models
- Discuss with sell-side brokers and analysts to get their thoughts and question their thesis
- Perhaps arrange a call/meeting with the company itself to dig deeper
(can last as long as a day or even a week(s) dependent on the size of the project)
- Then discuss/present to the PMs and execute/ditch the idea
Click to expand...
That's pretty interesting. What thought process are you using when you are looking for investments? Can you give an example?
 
nicki said:
That's pretty interesting. What thought process are you using when you are looking for investments? Can you give an example?
Click to expand...


Well there are some ground rules that every investment we make must meet in order to comply with the fund's mandate (so we are strict on geography, market cap, etc.) and then most idea generation is dependent on either the house view on a particular sector or theme (e.g. Consolidation in Hotels) which we will explore in greater detail and decide which names we favour or we take a contrarian view to conventional thought on a particular name or situation (e.g. Yahoo fell to sub $28 after the market didn't believe it would successfully realise the value in its Alibaba stake via a spinoff due to tax concerns even though management had continually expressed it's intention to engage with shareholders to realise value- in light of recent news regarding sale of the core business it's now trading at >$34).

Hope this helps...
 
doublebarrel said:
do you think leadership is an important skill in trading? thanks.
Click to expand...

I don't think it's necessary at all on the buy side, I can't speak for the sell-side but I doubt it's any different. Trading is very individualistic and independent, you don't really work in conventional 'teams' and so there isn't really need for leaders in the way you'd expect. Definitely not on the buy side where the leaders are the PMs who instruct the traders. I'd say the more important skills for traders are a sense of ownership and accountability, an ability to read a market and the sense to know when to hurry and when to be patient.
 
HFAnalyst said:
I don't think it's necessary at all on the buy side, I can't speak for the sell-side but I doubt it's any different. Trading is very individualistic and independent, you don't really work in conventional 'teams' and so there isn't really need for leaders in the way you'd expect. Definitely not on the buy side where the leaders are the PMs who instruct the traders. I'd say the more important skills for traders are a sense of ownership and accountability, an ability to read a market and the sense to know when to hurry and when to be patient.
Click to expand...
Thanks.

Would you describe the best trade idea you had so far, what instrument was it and how did it play out?
 
What do you think is the future of Hedge Funds and the job as a trader in regards to the disruption of the technology? Do you think that algorithmic trading would take the place of the traders? (I am even more concerned by reading recent news about how banks cut fixed income positions and such.)
 
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