What would you do... interesting dilemma

I’m graduating from a top tier MBA program this May (and working on Level II) and have received two offers to commence when I graduate. I am looking for advice from intelligent individuals like those on this board, many of whom are either in similar situations or will be in the near future (hopefully). The first offer is an equity research associate position at a large buy-side firm. The role is exactly what you’d expect. I’d be working with two senior analysts covering specific stocks in a specific sector. I’d be performing financial modeling, preparing research notes, etc. Career track trends towards becomming a senior research analyst or possibly a PM several years down the road. The second offer is at a very small Investment Management firm (and by very small I mean 3 employees and $100M in AUM). The firm manages money for a number of institutional clients (pensions, endowments). They currently manage three funds (large, mid, & small cap) and have a solid track record. My role would be helping the owner roll out and manage a new long/short ETF fund. I guess I should explain. Basically we will analyze sectors of the market we believe will outperform (tech, defense, etc.) and go long corresponding ETF sector funds. Additionally, we will analyze sectors we expect to underperform and short those sector-specific ETF’s . I would be completely involved at the onset assisting the owner in every facet of the development and management process. The company expects to grow considerably over the next couple years and it could (and I stress COULD) be a great opportunity to get in at a growing firm and make a name for myself at a young age… or it could go bust, who knows. As you can tell these are different roles that would lead down different paths. The question is: Which would you take and why? Any thoughts are greatly appreciated.

I’ll bet nearly everyone here is as impressed with your resume as you are.

JoeyD, I’m not impressed with anything and could give a sh*t if anyone else is… just asked a question. No need to act like a douchebag.

I would take the second offer, simply because it sounds more interesting, and i’m a bit ‘all or nothing’. I would take the additional risk for the greater reward.

Option 1 is the safe play. You will work hard and go on to make a very good living for yourself. Option 2 is riskier. Personally I would find it very exciting. If the firm takes off you will have a great feeling of accomplishment as you would know you contributed greatly to to the success. Also I imagine the financial rewards would be very large. If the firm busts you would still have a very strong resume’ and could probably go the equity research route anyways. Given that the upside is great and the downside (getting laid off) isn’t really that big of a deal I would take option 2.

Interesting points… thank you for your thoughts. Much appreciatede.

the second job sounds like hedge fundish in that you are going long and short. the second job is alot more intereting (i will assume there is frequent rebalancing of portfolio in job 2): -it sounds more like a buy-side trading job; which gives you more openings in the future if you want to trade. Also gives you experience as an analyst Being an analyst is a shite job. You toil endlessly for little reward; very low reward in terms of Maslows hierachy of needs. I mea, no family, no gf, not that much money, being a bitc.h. Go to www.wallstreetoasis.com and see what some of these guys think about their jobs, it will make you nauseate. The second job for me is scary, the risk is high, and the potential reward unknown. I personnaly would not take a position in such a trade. BUT, it makes you more polyvalent, and more importantly, you might be able to break into trading later, which is the best thing in the world (work/life balance), not to mention, that if you ever do want to toil endlessly like a slave, you will be able to later also

I just came from a small RIA with 150 mil AUM. #1 benefits sucked #2 it sucks not having several colleagues #3 in the current environment, i wouldnt want to be at a shop with $100aum…if mkt rolls hard the doors could close #4 In a small shop, one person’s mood affects the overall atmosphere of the entire office. My boss was a miserable prick who was always in a bad mood and as a result, everyone felt like they were walking on egg shells all day #5 Exit opps. It has been my experience that the name of the company you work for means a lot. If no one has ever heard of FudgePack Capital LLC, its harder to get a second look. However, if you were at Janus, Marsico, etc etc…you have a better shot at instant credibility. #6 and possibly the most important. No cute 24 yr old secrataries to gawk at all day. You might think im joking…but I was deprived for three years. You know its bad when you find yourself getting excited when a Susie Orman commercial comes in the tube during the workday. I’d play it safe in this mkt. It is my personal belief that we are going to have a tough 12-18 months.

urymoto1, no offense but what are you talking about?

I second the above. WTF are you talking about. wallstreetoasis is for wannabe bankers. Yes they added an equity research section…but cmon. Are you seriously going to make that generalization from some website an IB associate runs in his spare time. clean it up

little buddies, wallstreetoasis is full fo rubbish, you always must make your due dilligence. But there is some truth to it. My own personnal experience is what drove me to those comments. I always wanted to trade, but took a job i shouldnt have. I hated my life, my work, my co-workers, my boss…etc… Now that i am trading, its a completely different life and SALARY…the CFA is mostly for personnal challenge now. in any case, EVERYBODY knows analysts have it the worst. Come on are you still all college students.? You should know that Being an analyst SUCKS ASS. Its not a life, its completely pathethic. Unless you work in a small boutique firm in some small country where you can do 9-5. I never worked those hours…

I tend to agree with Jbis, especially #5 and #6. First job out, you should really go for name recognition. You can always jump ship and go boutique afterwards, but it’s tougher if you want to try the opposite route (especially if you’re sitting in interviews 5 years from now saying 'I’ve worked 5 years at a bust firm). Have you spoken to the senior analysts at firm 1? I think the personality and willingness of your new boss to be a good mentor should be a key deciding factor.

I find it is always better to start out in a big firm for name/credibility/network then joining a small firm for $$.

Get the Brand name on the resume first (first offer). You’ll then see how the world of small boutique firm opportunities opens up, which is limitless. Gamble wisely.

Go for the 1st offer. Being in a big company gives you more exposure (to learn, to be familiar with how things work in a large firm setting, to get to know influential people etc). Definitely important to get that nice name of a big firm on your resume. For the 2nd offer, it seems like the downside risk is huge, though the upside gains are large. But for the 1st one to me the downside risk is small but the upside gains are large. Seems to me that the 1st option is a better one.

I’m with the others. Big firm man, play it safe, do 3-5 at a big firm, see how they operate, then you can always go boutique. If you go the other way there’s a fair chance you may not be able to get back into a respected big firm. Plus, even if you do well in a small firm, many bulge brackets have a very elitist mentality and may feel that you’re not prepared to hold the equivalent position at their level. I’d love to be in your position, and hopefully someday I will, but my advice to you is you came this far which I’m sure wasn’t easy, don’t take needless chances now, the first several years are a delicate time. Also, I’m always in favor of keeping your options open which the large firm does.

I would choose option 1 with big firm. 1) There are so many hedge funds out there with managers who say they’re going to be big, but a number of them end up failing or at least continue to stay very small. In some cases, most of their investors have left, but they live on, running their own personal money. 2) I’ve noticed that going even from 100m to 500m is a huge task in this world where you’ve got a ton of competition. How well have these guys done exactly? To attract alot more capital and be super successful, they had to have years and years of consistently spectacular returns. And who knows where they get their numbers. I know of hedge funds that completely play with their numbers so that their performance looks good. They actually go out and market these numbers and sadly… they get away with it. 3) If you’re with a small hedge fund, to build credibility, you have to meet incessantly with investors and you don’t get to focus as much on your research. Investors will meet with the marketing people but eventually they want to meet the managers and/or the analysts, especially at a small firm. 4) Go with the bigger firm with the better name. You’ll have great resources at your disposal and can just focus on your research and stock picks. Little firm, you may have to fight for your own bloomberg or other basic and necessary tools. You may not even be able to go on trips to meet with management because small hedge fund has a small budget. It’s such a waste of your time trying to fight for any of these things. 5) At a big firm, they got big because they were able to prove they were successful. Pick up that experience. Learn from those who built that place and continued to be successful. It’s not that you can’t contribute to big firm. Of course you can! These big firms have to continue to be successful and you need to help them. Pick some good names and you’ll be known for being the analyst that is smart and is good investor. Then when you’ve earned your big bucks and are ready to run money and have built a decent track record, open your own fund. 6) Job of an equity research analyst is probably one of the best jobs out there, if you’re not slaving away at a small hedge fund that’s trying to make it or working super hard to compete. Actually, I think it also depends on who you work for. If you’re working for Mr. Gabelli, maybe it’s going to be a hard life. But if you’re working for, I don’t know, someone who gives you a lot of latitude in your work because he respects you, then you’re sure to have it pretty good. Just make sure you have good picks. 7) Make sure whoever you sign up with, you can work with them and you agree with their strategy. Good luck and go with big firm.

I would also consider your opinion on the top guy at boutique and your realistic expectations for the growth potential of the fund and if you can become a partner at some juncture. A good friend of mine started in a relatively small fund over 10 years ago and did very well with it. Good smart people there and now he is a partner and head trader making 7 figures take home. No easy choice, “do you feel lucky punk” comes to mind. But listen, it sure is nice to have a choice. You are ahead of the game already! Good Luck.