I am closing in on an offer with a L / S equity hedge fund. I have interviewed with some hedge funds in the past and have been able to find publicly available info. on the funds to verify that they are legit, but those funds have all been in the multi-billion AUM range. This fund is smaller, and I am having a hard time finding info. I’m not saying it’s a scam, but I want to know exactly what I am getting into, and my only current source of information are the people who represent the fund. I can’t find anything on Google and I can’t find a 13-F (although admittedly, I might be looking in the wrong place - help?). So my question to all of you is, how do I go about verifying that this is a legitimate place to work and that I am not going to step into a bad situation if I do get the offer? Also, how do people feel about working for smaller, lesser known (or maybe “unknown” funds)? The job sounds very good and according the people I have spoken to, the results are solid. Thanks all.
your presence has been requested at afot dot freepowerboards dot com in the general discussion forum…
Great, thanks. I didn’t know about the site.
If you want to email me the name of the fund, I can check the HF databases I use for any info. jperlin (at) gmail (dot) com
Bump. I could use some help here. I got the offer – the price is right and the opportunity seems right, but I still want to make sure that the fund is not going to blow up in my face. I have spent 10-15 hours interviewing with people from the firm, have been to the offices and have checked the references they have provided (perhaps of limited usefulness, but at least I got to speak with people who have held my position before). So, guys, if you were evaluating a hedge fund opportunity for a smaller-sized fund, what would you need to see before taking the offer?
And by smaller, I mean $200-500MM AUM. The fund is aiming to attract more capital and should be able to hit the $1B mark, which is where it was before they returned a lot of capital a few years ago.
bromion Wrote: ------------------------------------------------------- > And by smaller, I mean $200-500MM AUM. The fund is > aiming to attract more capital and should be able > to hit the $1B mark, which is where it was before > they returned a lot of capital a few years ago. Big red flag right there. Why’d they return the money?
bromion Wrote: ------------------------------------------------------- > Bump. > > I could use some help here. I got the offer – the > price is right and the opportunity seems right, > but I still want to make sure that the fund is not > going to blow up in my face. I have spent 10-15 > hours interviewing with people from the firm, have > been to the offices and have checked the > references they have provided (perhaps of limited > usefulness, but at least I got to speak with > people who have held my position before). > > So, guys, if you were evaluating a hedge fund > opportunity for a smaller-sized fund, what would > you need to see before taking the offer? For starters: Track record, strategy, PM who knows what he/she’s doing, good understanding of your role.
That’s what I thought too at first. The manager returned some capital so that he could free up some of his time to start a family (which he did). A substantial portion of the remaining AUM is his own money, and he was able to cut the number of hours he worked from over 80 to closer to 30-40. I would have expected the decline in AUM to have been from investor redemptions due to weak performance, but the performance has remained strong. Also, staff turn over is zero – people did not jump ship during the transition, which I think is a positive. People tend to vote with their feet. The shop is more focused on the “20” than the “2” – i.e., the strategy focuses on special situations and it is not an asset collection shop.
emarkhans Wrote: ------------------------------------------------------- > For starters: Track record, strategy, PM who > knows what he/she’s doing, good understanding of > your role. Yes, I have all of those things. I did not ask enough questions during interviews for the first job I took in the industry and it ended up being a pretty weak place to work. I am not going to make that mistake twice. I grilled them in the interviews we have had.
Hey bromion, here is my two cents: There are many HF databases, you can make a research there. Any solid HF has to be listed at least once. 1. Altvest - tracks 2000+ HFs with data since 1993 2. HedgeFund.net - has DB of 4000 HFs 3. HFR (Hedge Fund Research) 4. CSFB/Tremont - uses data from 3000+ HS.
bromion Wrote: ------------------------------------------------------- > That’s what I thought too at first. The manager > returned some capital so that he could free up > some of his time to start a family (which he did). > A substantial portion of the remaining AUM is his > own money, and he was able to cut the number of > hours he worked from over 80 to closer to 30-40. I > would have expected the decline in AUM to have > been from investor redemptions due to weak > performance, but the performance has remained > strong. Also, staff turn over is zero – people > did not jump ship during the transition, which I > think is a positive. People tend to vote with > their feet. > > The shop is more focused on the “20” than the “2” > – i.e., the strategy focuses on special > situations and it is not an asset collection shop. I’m sensing serious BS here. Let’s say the guy finds 30 “special situations,” (which by the way isn’t really the same strategy as “long/short”). If he’s managing 750MM, he simply puts 3 times as much capital into each of the 30 than if he’s managing 250MM. The only reason he wouldn’t is if there are liquidity contraints at the higher numbers. For much the same reason, I’m missing the relationship between AUM and hours at the office.
emarkhans Wrote: ------------------------------------------------------- > I’m sensing serious BS here. Let’s say the > guy finds 30 “special situations,” (which by the > way isn’t really the same strategy as > “long/short”). If he’s managing 750MM, he simply > puts 3 times as much capital into each of the 30 > than if he’s managing 250MM. The only reason he > wouldn’t is if there are liquidity contraints at > the higher numbers. > For much the same reason, I’m missing the > relationship between AUM and hours at the office. I see your point here and I asked the same question. It is a L / S strategy in the sense that he is shorting stocks, but is pursuing long special situation strategies. It is NOT supposed to be market neutral. The liquidity issues on the short side should be fairly obvious. On the long side, he is dealing with a lot of smaller cap names and the fund’s alpha is sensitive to liquidity constraints. I am not saying he couldn’t take in more capital (obviously he could), but the market opportunity for some of these investments is not that deep. The relationship between hours and AUM is this – he can work much fewer hours with, say, 80% of the results he could get if he worked a lot harder. It is an issue of diminishing marginal returns in terms of effort. If he is mostly managing his own money, then 80% of his top performance is acceptable. If he is managing other people’s capital, then there is a greater responsibility to go all out and do your very best on their behalf. I realize that this philosophy runs counter to the cash grab that usually takes place at most of these sort of funds, but I don’t think it’s outside the realm of reason. The guy is financially set for life, he doesn’t really need any additional money he might make, and he is still in the game because he enjoys the work. From having spoken to him extensively in person, I don’t think this is BS. Anyway, I am not defending his line of reasoning and decisions to the death here, just explaining it as I have come to understand it. Thanks for the feedback.
All that’s plausible. Is it an analyst job?
Yes.
bromion Wrote: ------------------------------------------------------- > Yes. Are you in the NYC area?
no, it’s west coast.
bromion Wrote: ------------------------------------------------------- > no, it’s west coast. The profile you mentioned sounds a lot like Chapman, discussed in the other post. Do you know anyone with roughly your background who might be interested in a piece of a startup fund in NYC area? Now that Level 3 results are in, the last structural impediment to me getting going is gone and I need to get cranking.
emarkhans Wrote: ------------------------------------------------------- > Do you know anyone with roughly your background > who might be interested in a piece of a startup > fund in NYC area? Now that Level 3 results are > in, the last structural impediment to me getting > going is gone and I need to get cranking. It is NOT Chapman. In terms of your question, I know one guy currently in NYC who is very smart and is looking to break into a front office role on the Street. He passed 3/3 in 18 mo. and has an SAT around 1500 as well as a BBA in finance from a good but not top-tier school. He has two years at a bank (not an ibank), and he has good knowledge of financials. Anyway, he is looking for a job right now if you want to talk to him.
emarkhans - are you starding a fund in nyc?