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Internship at a small hedge fund

Hi everyone,

I am an international student in a non-target school MS-finance program in the US pursuing a career in equity research. I have a summer internship offer from a small long-short small-mid cap focused hedge fund in upstate new york. 

My initial plan was to break into the sell side and then try to move to buy side after a few years, but luckily I landed this internship. Given that I am an international and have never worked in the US, what I want to understand is how valuable is an experience in a small fund? If I would want to move to a bigger fund later on, mainly because of the need for visa sponsorship, will this experience help me do that?

I would really appreciate your guys help.

It should be helpful

My situation is the same dude. Visa sponsorship is our target aim. What I can suggest is to try to find companies that have already sponsored working visas. There is a website where you can look up how many visas the company sponsored and what positions, and then start targeting those companies.

This seems like a good start.

#FreeCVM #FreeTurd #2007-2017

Fantastic internship. Do anything they say and work hard. Always ask questions. 

Really a good opportunity there.

wow really great start!! 

very good news (not common) thread on AF!!

Keep up whatever you’re doing

Be yourself. The world worships the original.

Thank you so much for your replies.

I received a full-time offer from the same fund! Thank you so much everyone for your support.

Gigaloo wrote:

I received a full-time offer from the same fund! Thank you so much everyone for your support.

How old are you?

This might be the first thread in Careers where everyone agrees OP is on the right track. Quite uplifting.

Nice work, OP. Keep it up and you’ll be earning enough to live off muni bond interest in no time!

Thank you!

@dasstienn I am 25.

Gigaloo wrote:

I received a full-time offer from the same fund! Thank you so much everyone for your support.

How did you convince them to hire F1 student?

I worked unpaid for 6 months while doing my masters and then I worked as a paid intern for 4 months before securing a full time. Just consistent hard work.

Sweep the Leg wrote:

This might be the first thread in Careers where everyone agrees OP is on the right track. Quite uplifting.

Nice work, OP. Keep it up and you’ll be earning enough to live off muni bond interest in no time!

Thank you. Honestly, the money isn’t great right now because it’s a small fund, but the learning and exposure is mind blowing. 

It completely depends on the training you are getting. I know it sounds cliche, but money will follow if you are a skilled analyst. Small-cap often runs into illiquidity issues and general market (dis)interest, but if by “mid cap” you are covering names with decent trading volume ($20mm ADV) and/or $10-20B in market cap, there’s plenty of opportunity for a differentiated view and alpha generation. You might even be better off covering that space than large-cap, where it’s much harder to generate alpha and where fees for passive are very low (and thankfully can’t get too much lower, otherwise all of us “active managers” out there would be out looking for a career change).

numi wrote:

It completely depends on the training you are getting. I know it sounds cliche, but money will follow if you are a skilled analyst. Small-cap often runs into illiquidity issues and general market interest

Small cap funds/strategies, while tactically they shift in and out of favor like anything else, are always in demand from professional buyers exactly because good funds are eventually forced to close due to liquidity restraints.

If your statement was meant to be taken as “there are times raising money in small cap funds is very difficult,” I’d strongly disagree with that statement. Even a semi-decent small cap fund (particularly if value oriented) is probably the easiest space to raise assets.

I actually meant (dis)interest, typo

That said, can you share an example of a small cap value fund that has had success raising assets lately? Value as an asset class in smid cap has dramatically underperformed in recent years, much as it has in large cap. But sure, if someone in that sandbox is shooting the lights out, I would not be surprised at all if they are raising money.

numi wrote:

I actually meant (dis)interest, typo

That said, can you share an example of a small cap value fund that has had success raising assets lately? Value as an asset class in smid cap has dramatically underperformed in recent years, much as it has in large cap. But sure, if someone in that sandbox is shooting the lights out, I would not be surprised at all if they are raising money.

If I still had Morningstar Direct I could pull the flow info, but that’s not really my point. When thinking about the professional buyers - so getting in the home office models at a major B/D, sub-advised opportunities, winning a model placement with gigantic RIAs, searches for DB plans, foundations, and endowments…all those have a strategic position to small caps. Let’s just use small value as the example. They’re never going to be naked small value even when value is out of favor. Sure, they may make a tactical decision to lower their exposure for a time, but you still have a placement in their models.

How small value differs from any other major asset class is that good funds close every month (well, at least several a year) so there are always searches going on for small value managers that have capacity to win a $500mm mandate. The list of good managers with capacity is pretty slim. I was just at a conference last week where about 20 professional buyers discussed what they were looking for and every one of them said they’re always looking at the small cap space.

Earlier I probably should have chosen my words a bit better, but the point is there’s more search activity for large block wins in the small cap space than anywhere else. Whether or not you’re successful in raising assets depends on more than just performance and capacity, of course.

We usually operate in the $250m-$2b range. We have the flexibility to deviate but as @numi mentioned, smaller companies have serious illiquidity issues. I recently came across a great small-cap company with $100m mcap but average daily volume is $50k, can’t really do anything with that. I have also researched on larger companies with $20-25b mcap, but it’s tough to differentiate in this segment. Many opinions/thesis already out there and its difficult to be original.

@Sweep the Leg thank you for the above comment, really insightful. My fund is set to close at $250m, hopefully that happens soon!

Gigaloo wrote:

We usually operate in the $250m-$2b range. We have the flexibility to deviate but as @numi mentioned, smaller companies have serious illiquidity issues. I recently came across a great small-cap company with $100m mcap but average daily volume is $50k, can’t really do anything with that. I have also researched on larger companies with $20-25b mcap, but it’s tough to differentiate in this segment. Many opinions/thesis already out there and its difficult to be original.

@Sweep the Leg thank you for the above comment, really insightful. My fund is set to close at $250m, hopefully that happens soon!

Generally small caps are <$5B market cap so you shouldn’t have to soft close a fund at $250mm. I’ve seen fairly concentrated small cap funds (say about 50 holdings) that can remain open to about $3B. That seems to be the industry number where small value funds either close or change their mandate (a horrible idea, btw) to go up into mid-caps.