Hedge Funds: How to Break In

Had someone DM a question - “Brett, how do I get a job at a hedge fund?”

Well, there’s a FRONT DOOR and a BACK DOOR…

FRONT DOOR:

The front door is relatively straightforward. Go to a top undergrad, work in I-banking, wait for the headhunter's e-mail (these days will come shortly after you land on the desk), ace the interview, and accept the job. 1 year of banking is usually sufficient.

Works for sell-side research and private equity as well, but over my 7 years at Maverick 80%+ of the new analysts were 1-2 year i-bankers. Why? 1-2 years of banking is enough to master the foundational analytics and serves as a great screening tool for HFs on work ethic and intellectual horsepower. And just how things are done.

Need analyst? Get a stack of 30 I-banker resumes and pick the best 2-3. It works, so why waste time looking elsewhere?

This is the process for most large, institutional hedge funds. So if you are young and hungry and want to work in the hedge fund industry, point yourself towards i-banking with a high GPA, relevant internships and good extracurriculars. That is the FRONT DOOR.

BACK DOOR

But I have a soft spot for the BACK DOOR stories. I’ve met plenty of nice, competent HF analysts from Exeter, Wharton, and Goldman. But as a state school kid myself, I love the hunger and the hustle, not the easy stories.

To get to Wall Street from ASU I printed out 100 resumes and literally Fed-Ex’d them to I-banking MDs on the theory they would think it was an important document, open it, and interview me. It worked. Throughout my career, that hustle and creativity compensated for what I lacked academically / intellectually.

So you want to work at a hedge fund but find the front door shut to you for whatever reason??

Here is MY BACK DOOR strategy that I teach my ASU students:

1. Build an impressive, unique, and HF-catered resume.
   Have a 3.3 GPA from a state school and dinged by Goldman? Compensate elsewhere. Add things to your resume that will hook a Hedge Fund. Write a senior thesis on a relevant long-short hedge fund topic, and put that on your resume.

   Compete in every stock pitch competition you find, and put top finishes on your resume. DO AN INTERNSHIP that is relevant in some capacity, even if it is building models for free for a local asset manager (drive Uber at night if you say you can’t afford an unpaid intern)

   Apply to Value Investors Club OVER & OVER. If they let you in, this is a golden ticket on your resume. Start a Stock Picking club at your college. Ask the head of your college foundation for coffee - if they have a student-led fund, join it!!

   Think of other creative ideas like this to pepper your resume with to convincingly show your hunger. Attend the Berkshire Hathaway annual meeting and put that in the Other section on your resume. Make yourself look like a hedge fund guided missile.

2. Get a job that can be a stepping stone to a hedge fund.
   I-banking is the top, but not the only way (especially with the resume you are building). Sell-side research is also a wonderful training ground, and a sell-side associate at Baird is an easier get than Goldman TMT banking.

   Check the Institutional Investor (II) rankings and find the top dogs at non-bulges (most bulges centralize recruiting).

   In healthcare, for example, the studs of HC services are Justin Lake at Wolfe and Josh Raskin at Nephron. Not Goldman! Contact them directly for a job, and training under someone like that is an amazing path to a HF, given their reputation, contacts (you will have direct exposure to HF analysts), and respected analytical process.

   Jobs where you interface with HFs are a great start. But the biggest tip is to start your career as close to the Wall Street ecosystem as possible where you are doing actual analysis, NOT sales. Insurance sales / Northwestern Mutual ends your dream. Even Big 4 auditing can be a stepping stone if you are hungry.

   One hack I’ve seen used with success by my undergrad students is a master’s of finance. Behind the curve on recruiting? Add a year to your runway with a masters. Yes, it’s more debt and more school, but most MFIN students recruit into I-bank undergrad programs hunt for an internship post-senior year, enroll in MFIN, and use that time to recruit for the best job you can find. You can also upgrade your college by going to a top MFIN. MBA used correctly, can also get you into the game down the road

3. Once you have a killer resume and an acceptable stepping-stone job, start your hunt.
   Headhunters are the main pipes into big funds. If they don’t find you, find them (or DM me). They are designed to be elitist and exclusionary, so don’t let that disappoint you.

   I had an ASU buddy I came up with (fed-ex resume pal) who got dinged by HF recruiters. He just reached out a ton of funds on his own and got to finals with Blue Ridge and Ziff. They loved his hustle. The direct approach is rare, and because it’s rare, it can work.

   Here is another truth - there are probably 8,000 hedge funds out there and probably less than 100 use headhunters. The big funds do, for ease and expediency. But small funds with more episodic HR needs and smaller budgets are generally more flexible with the candidate's background (and LOVE a hungry kid). This is who you are targeting.

   How do you target them? I have a model for my students called “hacking hedge fund jobs” which I will summarize.

1. Create an exhaustive list of hedge funds by reverse engineering 13Fs.

2. Find the contact information for people at that hedge fund (website, LinkedIn, Rocket Reach reverse e-mail service).

3. Send an honest and earnest e-mail with your resume. And ask if you can semi-regularly send them your stock ideas (don’t pepper them with ideas until you ask)

4. Create institutional-quality stock pitches with detailed earnings models and 20+ page PPT stock pitches. Cater that idea to their 13F stock-picking style. If you’re feeling spicy, pitch one of their longs as a short (and be prepared to back it up!!!)

5. REPEAT. Do this for 100+ funds, drip new ideas quarterly (leverage the same ideas). It’s a numbers game!! Create as many contacts as you can. And make it clear that you want a job!

A lot of work? Yes! Are you likely to be successful with hard work and persistence? Also yes!

If you're interested in hearing more from Brett and his thoughts on the subject, you can register for a free webinar by clicking the link below.

Good luck!